Crude Oil Price Update – Needs to Hold $57.97 to Sustain Rally into $58.95 or Higher

U.S. WTI crude oil futures continued to climb early Tuesday as supply cuts by OPEC and its allies, and a less-pessimistic view over fuel demand recovery boosted prices. Nearby futures are testing their highest level since January 20, up for a seventh session, the longest winning streak since January 2019.

At 05:37 GMT, March WTI crude oil futures are trading $58.45, up $0.48 or +0.83%.

The rally is being fueled by a combination of OPEC+ production cuts, additional supply reductions by top exporter Saudi Arabia and hopes of an oil demand recovery when COVID-19 vaccines take effect.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through Monday’s high at $58.14 reaffirmed the uptrend. A trade through $51.64 will change the main trend to down.

The short-term range is $51.64 to $58.51. Its retracement zone at $55.08 to $54.26 is the nearest support and value zone. The area will move higher as the market moves up.

Daily Swing Chart Technical Forecast

The daily chart indicates March WTI crude oil futures have a clear shot at the April 23, 2019 main top at $58.95. This is a potential resistance level or a trigger point for an acceleration to the upside.

Support is a series of “old tops” at $58.06, $57.74 and $57.41. Bullish traders are hoping that “old tops turn into new bottoms” like the old adage says.

Given the prolonged move up in terms of price and time, the direction of the March WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to yesterday’s close at $57.97.

Bullish Scenario

A sustained move over $57.97 will indicate the presence of buyers. If this continues to generate enough upside momentum then look for the rally to extend into the April 23, 2019 main top at $58.95.

Bearish Scenario

A sustained move under $57.97 will signal the presence of sellers. This won’t change the main trend to down, but it could trigger a break into $57.74 and $57.41. The latter is a potential trigger point for an acceleration to the downside.

A close under $57.97 will form a closing price reversal top. If confirmed, this will shift momentum to the downside and possibly trigger the start of a 2 to 3 day correction of the current rally.