Crude Oil Price Update – Sellers Confirm Potentially Bearish Closing Price Reversal Top

U.S. West Texas Intermediate crude oil futures are trading sharply lower on Wednesday after confirming yesterday’s potentially bearish closing price reversal top. The selling is being fueled by concerns over slowing global economic growth. Traders are also worried about rising U.S. inventories and production. Supporting the market since the first of the year have been the OPEC-led supply cuts, which are expected to extend into June.

At 13:14 GMT, May WTI crude oil is trading $58.71, down $0.58 or -0.99%.

Today’s U.S. Energy Information Administration’s weekly inventories report could influence the price action today when it is released at 14:30 GMT. It is expected to show a 500,000 barrel build.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the closing price reversal top on Tuesday and today’s confirmation of the chart pattern.

A trade through $59.86 will negate the closing price reversal top and signal a resumption of the uptrend. The market is in no position to change the main trend to down, but there is room for a correction into a retracement zone.

The minor trend is also up. A trade through $58.03 will change the minor trend to down. This will confirm the shift in momentum.

The major resistance is the 50% level at $59.63. The short-term range is $54.87 to $59.86. Its retracement zone at $57.37 to $56.78 is the primary downside target.

Daily Technical Forecast

Based on the early price action, the direction of the May WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at $58.87.

Bullish Scenario

A sustained move over $58.87 will indicate the return of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the major 50% level at $59.63, followed by the closing price reversal top at $59.86.

Bearish Scenario

A sustained move under $58.87 will signal the presence of sellers. The daily chart is wide open to the downside under this angle with the 50% level at $57.37 the next target. The daily chart indicates that traders should start preparing for a potential acceleration to the downside.