Crude Oil Price Update – Setting Up for Potentially Bearish Closing Price Reversal Top

U.S. West Texas Intermediate crude oil futures are trading lower shortly after the regular session opening on Tuesday after hitting a 5-month high earlier in the session. The early rally was driven by tightening supply and worries over a possible supply disruption due to a military conflict in Libya. Gains were limited by concerns that a slowing global economy would lead to lower future demand.

At 12:15 GMT, May WTI crude oil futures are trading $64.22, down $0.18 or -0.28%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. It was reaffirmed earlier in the session when buyers took out yesterday’s high. Retaking today’s intraday high at $64.79 will signal a resumption of the uptrend. The trend will change to down on a trade through $61.82.

Due to the prolonged move up in terms of price and time, the market is also ripe for a closing price reversal top. Today’s early price action suggests one may be forming.

On the downside, the first major support is a Fibonacci level at $63.45.

Daily Technical Forecast

Based on the early price action and the current price at $64.22, the direction of the May WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to yesterday’s close at $64.40.

Bullish Scenario

A sustained move over $64.40 will indicate the presence of buyers. This could trigger an acceleration over $64.79 later in the session.

Bearish Scenario

A sustained move under $64.40 will signal the presence of sellers. This could trigger a break into the first uptrending support angle at $63.67, followed closely by $63.45. If this level fails then look for an acceleration into the short-term uptrending Gann angle at $62.82.

A close under $64.40 will form the closing price reversal top. If confirmed on Wednesday, this could lead to a 2 to 3 day correction.