Crude Oil Price Update – Strengthens Over $49.27, Weakens Under $48.57

U.S. West Texas Intermediate crude oil futures are trading higher on Monday. The market is being underpinned by the start of the OPEC-led output cuts. The rally is being driven by optimism over the start of two-day negotiations between the United States and China in Beijing. The Peoples Bank of China also reduced its reserve requirement in an effort to stimulate the economy. Some oil traders feel that this could lead to increased demand.

At 1323 GMT, February WTI crude oil is trading $48.84, up $0.88 or +1.83%.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will officially change to up on a trade through $54.77. A move through $42.36 will signal a resumption of the downtrend.

The main range is $54.77 to $42.36. Its retracement zone at $48.57 to $50.03 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.

The minor range is $42.36 to $49.47. Its 50% level or pivot at $45.92 is support.

Today is also the eighth day up from the last main bottom. This puts the market inside the window of time for a potentially bearish closing price reversal top.

Daily Technical Forecast

Based on the early price action, the direction of the February WTI crude oil the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at $49.27 and the main 50% level at $48.57.

Bullish Scenario

Overtaking and sustaining a rally over the downtrending Gann angle at $49.27 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the main Fibonacci level at $50.03. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

The inability to overcome $49.27 will be the first sign of weakness. Taking out and sustaining a move under the 50% level at $48.57 will signal the presence of sellers. This is the trigger point for a possible acceleration to the downside. The daily chart is wide open under this level with the uptrending Gann angle at $46.36 the primary downside target.

Basically, look for the upside bias to continue on a sustained move over $49.27. Look for a downside bias to develop on a sustained move under $48.57.