Crude Oil Price Update – Strengthens Over $58.80, Weakens Under $57.79Based on yesterday’s price action and the current price at $58.08, the direction of the March WTI crude oil market on Wednesday is likely to be determined by trader reaction to a pair of 50% levels at $58.80 to $57.79.
U.S. West Texas Intermediate crude oil futures are trading flat-to-lower early Wednesday, while posting an inside trade. The price action indicates investor indecision and impending volatility. The market posted a potentially bullish technical reversal on Tuesday, however, there has been no confirmation of the chart pattern.
Helping to keep a lid on the market was the American Petroleum Institute (API) weekly storage report that showed a surprise crude oil inventory build of 1.1 million barrels for the week-ending January 10, compared to analyst expectations of a 474,000-barrel draw in inventory.
At 05:20 GMT, March WTI crude oil is trading $58.08, down $0.18 or -0.31%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, Tuesday’s closing price reversal bottom may be an early sign that momentum is getting ready to shift to the upside.
A trade through $58.73 will confirm the closing price reversal bottom. This won’t change the trend to up, but it could lead to a 2 to 3 day short-covering rally.
A move through $57.74 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The main range is $50.18 to $65.40. Its retracement zone at $57.79 to $55.99 is a potential support zone target. The zone was tested successfully on Tuesday when buyers rebounded following a test of $57.74.
The major retracement zone at $58.80 to $61.53 is potential resistance. It is controlling the longer-term direction of the market.
The new short-term range is $65.40 to $57.74. Its retracement zone at $61.53 to $62.43 is a potential upside target. It straddles the major Fibonacci level at $61.87.
Daily Swing Chart Technical Forecast
Based on yesterday’s price action and the current price at $58.08, the direction of the March WTI crude oil market on Wednesday is likely to be determined by trader reaction to a pair of 50% levels at $58.80 to $57.79.
A sustained move over $58.80 will indicate the presence of buyers. If this move is able to generate enough upside momentum then we could see a rally into at least $61.53 over the near-term.
A sustained move under $57.79 will signal the presence of sellers. Taking out $57.74 will negate the closing price reversal bottom and signal a resumption of the downtrend with $55.99 the next likely downside target.