Based on the current price at $52.39, the direction of the January WTI crude oil market the rest of the session is likely to be determined by trader reaction to the short-term pivot at $51.98.
U.S. West Texas Intermediate crude oil futures are trading lower Wednesday with prices being pressured by another U.S. inventory increase and a steep drop in U.S. equity markets. The weekly inventory report from the American Petroleum Institute (API) showed a larger-than-expected inventory build for the week-ending November 30. The threat of a global economic slowdown weighed on future demand.
At 0545 GMT, January WTI crude oil futures are trading $52.39, down $0.86 or -1.62%.
The main trend is up according to the daily swing chart. The trend turned higher on Monday when buyers took out the last swing top at $52.56. A trade through $54.55 will signal a resumption of the uptrend. The main trend changes to down on a trade through $49.41. This is followed by a pair of main bottoms at $47.96 and $46.00.
The minor trend is also up. A new main top has formed at $54.55.
The new short-term range is $49.41 to $54.55. Its 50% level or pivot is at $51.98. This price is controlling the near-term direction of the market. Since the trend is up, buyers could come in on a test of this level. They are going to try to form a secondary higher bottom.
On the upside, the next major upside target is the main Fibonacci level at $54.79. Overcoming this level could trigger an acceleration with a 50% level at $58.95 the next target.
Based on the current price at $52.39, the direction of the January WTI crude oil market the rest of the session is likely to be determined by trader reaction to the short-term pivot at $51.98.
A sustained move over $51.98 will indicate the presence of buyers. If this move creates enough upside momentum then look for a drive into $54.55, followed closely by $54.79. Look for an extension of the rally on a sustained move over $54.79. The daily chart indicates there is plenty of room to the upside.
A sustained move under $51.98 will signal the presence of sellers. If this move attracts enough sellers then look for the move to extend further with the next major target the main bottom at $49.41.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.