Crude Oil Price Update – Needs to Clear Weekly Fibonacci Level at $50.03 to Generate Upside Momentum

U.S. West Texas Intermediate crude oil is trading slightly better early Monday after finishing with a third consecutive weekly loss. OPEC’s production cuts start on January 1, but they’re not expected to have an impact on supply for several weeks. Meanwhile, the market is likely to continue to worry that efforts to trim the supply glut will fall short of expectations. Furthermore, investors are likely to continue to express concerns that a global economic slowdown will lead to a drop in crude oil demand.

Due to this week’s holiday shortened week, we’re likely to see the same type of price action that we saw last week with most of the market’s movements being driven by the volatility in the U.S. stock market.

Last week, February WTI crude oil settled at $45.33, down $0.26 or -0.57%. Early Monday, it’s trading at $45.74, up $0.41 or +0.90%.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. A trade through $42.36 will signal a resumption of the downtrend. The market is in no position to change the main trend to up, but it begins the week in the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. It will change to up on a move through $54.77. This will also shift momentum to the upside.

The minor range is $54.77 to $42.36. Its retracement zone at $48.57 to $50.03 is the first upside target. Since the main trend is down, look for sellers to show up on the first test of this area.

The main range is $76.40 to $42.36. If the minor trend changes to up then its retracement zone at $59.38 to $63.40 will become its next upside target.

Weekly Swing Chart Technical Forecast

The market opened up inside last week’s range which doesn’t really tell us anything.

If sellers take control then they may take a run at last week’s low at $42.36, followed by the January 22, 2016 main bottom at $41.48. This price is a potential trigger point for an acceleration into the February 22, 2016 main bottom at $38.73.

Taking out $42.36 then closing higher for the week will form a potentially bullish closing price reversal bottom. If confirmed next week then this could trigger the start of a 2 to 3 week counter-trend rally.

If buyers take control then look for them to try to take out last week’s high at $47.00. This won’t change the trend to up, but it will make $42.36 a new minor bottom.

The first upside target is $48.57 to $50.03. We’re looking for sellers to show up on the first test of this zone. Overtaking $50.03 will be a sign of strength.