Crude Oil Price Update – Setting Up for Near-Term Pullback into $53.78

January West Texas Intermediate Crude Oil futures are trading lower at the mid-session. Bullish traders tried to trigger a breakout to the upside but the rally failed to draw the attention of enough buyers to extend the move and prices retreated.

The main trend is up according to the daily swing chart, but momentum has been trending lower since the closing price reversal top at $58.14 on November 8.

The short-term range is $58.14 to $55.00. Its retracement zone is $56.57 to $56.94. This zone stopped the rally today.

The retracement zone is very important to the structure of the market. The inability to take out this zone and the subsequent sell-off indicates the presence of sellers. They are trying to form a potentially bearish secondary lower top.

The last swing down was $58.14 to $55.00 from November 8 to November 14, or a decline of $3.14 in 4 market session.

If $56.93 is the new top then we may see a short-term correction into $53.79 by November 24.

The main range is $51.09 to $58.14. Its retracement zone at $54.62 to $53.78 is another potential downside target.

Today’s rally then subsequent break indicates another top may be forming. If the downside momentum continues over the near-term then we can expect a possible pullback into the support cluster at $53.79 to $53.78.

Basically, a pair of retracement zones is controlling the price action. This makes $56.57 to $56.94 our resistance zone and $54.62 to $53.78 our support zone.