Crude Oil Price Update – Reversal Bottom Suggests Shift in Momentum, Trend Changes to Up on Trade Through $52.56

U.S. West Texas Intermediate crude oil futures finished lower but inside the previous day’s range. The move suggests investor indecision and impending volatility. There was no follow-through to the upside which would’ve confirmed Thursday’s potentially bullish closing price reversal bottom. This raises questions about whether the chart pattern was formed by aggressive counter-trend buying or weak buy stops.

Helping to underpin the market late this week was a report that said Russia may join OPEC in cutting production. Additionally, Bloomberg reported OPEC’s advisory committee suggested decreasing production by 1.3 million barrels per day (bpd) from last month’s levels. Surging oil production in the United States, Russia and a number of OPEC members kept a lid on prices.

Prices could tumble further next week if the United States and China fail to reach an agreement on trade.

On Friday, January WTI crude oil futures closed at $50.93, down $0.52 or 1.02%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, a new main top has formed at $52.56. This is important because a trade through this price will change the main trend to up.

The market also formed a potentially bullish closing price reversal bottom at $49.41 on November 29. If confirmed on a breakout over $52.20 then momentum will shift to the upside.

A trade through $49.41 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The short-term range is $52.56 to $49.41. Its 50% level or pivot is $50.99.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $50.93, the direction of the January WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the short-term pivot at $50.99.

Bullish Scenario

A sustained move over $50.99 will indicate the presence of buyers. If this creates enough upside momentum then look for counter-trend buyers to take a run at the main top at $52.56. A move through this level will change the main trend to up. If this creates enough upside momentum then look for the market to surge into the main Fibonacci level at $54.79.

Bearish Scenario

A sustained move under $50.99 will signal the presence of sellers. This could trigger a retest of $49.41. If this fails then look for renewed selling pressure with the next potential downside target coming in at $47.96 and $46.00.