Crude Oil Price Update – Needs to Hold $52.49 to Sustain Rally

Based on Friday’s price action and the close at $53.69, the direction of the March WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the short-term pivot at $52.49.
James Hyerczyk
Crude Oil

U.S. West Intermediate crude oil futures closed higher on Friday, but the short-covering rally wasn’t strong enough to turn the market higher for the week. The catalyst behind the move was worries about a possible supply disruption due to economic and political turmoil in Venezuela. The move was muted when traders determined that there was no immediate threat of sanctions against the country by the United States.

On Friday, March WTI crude oil settled at $53.69, up $0.56 or +1.05%.

Daily March WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $54.32 will signal a resumption of the uptrend with the next target the December 4 main top at $54.98. A trade through $50.66 will change the main trend to down.

The minor trend is also up. A trade through $51.86 will change the minor trend to down. This will also shift momentum to the downside. This is followed closely by another minor bottom at $51.29 and the main bottom at $50.66.

The main range is $54.98 to $42.67. Its retracement zone is $50.28 to $48.83. Trading on the strong side of this area is helping to sustain the upside bias. Consider this zone support.

The short-term range is $50.66 to $54.32. Its 50% level or pivot at $52.49 is controlling the near-term direction.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $53.69, the direction of the March WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the short-term pivot at $52.49.

Bullish Scenario

A sustained move over $52.49 will indicate the presence of buyers. If they can create enough upside momentum then look for the rally to possibly extend into the main top at $54.32. Taking out this level could trigger a surge into $54.98.

Things get interesting on a breakout over $54.98. The daily chart indicates there is plenty of room over this level with $59.48 the next likely upside target. Not sure when it will get there, but the more short-covering and aggressive buying over $54.98, the faster it will move.

Bearish Scenario

The inability to overcome $54.32 to $54.98 could cause buyers to give up on the long side. This could generate the momentum needed to take out the pivot at $52.49. The next break will be labored because of the series of bottoms at $51.86, $51.29 and $50.66.

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