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Crude Oil Price Update – Taking Out $45.13 Reaffirmed Downtrend, Next Target $44.68

By:
James Hyerczyk
Published: Dec 21, 2018, 13:29 UTC

Based on the early price action, trader reaction to the former bottom at $45.13 will determine the direction of the February WTI crude oil market today. A sustained move under $45.13 will signal the presence of sellers. If this move creates enough downside momentum then look for a test of the February 26, 2016 main bottom at $44.68. We could see a technical bounce on the first test of this level, however, if it fails then look for an acceleration to the downside with the February 9, 2016 main bottom at $43.51 the next likely downside target.

Crude Oil

U.S. West Texas Intermediate crude oil is trading lower on Friday, putting it down over 10 percent for the week. The major reasons for the selling pressure this week are the steep decline in U.S. equity markets, concerns about the strength of the global economy heading into 2019, and worries about future demand.

Traders are also expressing some doubts over the OPEC-led plan to cut production, trim the global supply glut and stabilize prices, but most are taking a pause until they see the impact of the strategy which begins on January 1.

At 1316 GMT, February WTI crude oil is trading $45.19, down $0.69 or -1.50%.

Trading volume is expected to be light today due to the start of a long Christmas holiday weekend. This could contribute to a few exaggerated price swings throughout the session.

WTI Crude Oil
Daily February WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It was reaffirmed earlier today when sellers took out the April 5, 2016 main bottom at $45.13.

The market is in no position to change the main trend to up, but it is in the window of time for a potentially bullish closing price reversal bottom. Recapturing $45.88 could fuel some intraday volatility, however, it is going to take a close over this level to produce the closing price reversal bottom.

Daily Swing Chart Technical Forecast

Based on the early price action, trader reaction to the former bottom at $45.13 will determine the direction of the February WTI crude oil market today.

Bullish Scenario

Overtaking and sustaining a rally over $45.13 will indicate the return of buyers. It will also indicate that today’s early selling pressure was likely fueled by sell stops and the thin trading conditions. We could see an intraday surge to the upside if the short-covering is strong enough to overtake yesterday’s close at $45.88.

Bearish Scenario

A sustained move under $45.13 will signal the presence of sellers. If this move creates enough downside momentum then look for a test of the February 26, 2016 main bottom at $44.68. We could see a technical bounce on the first test of this level, however, if it fails then look for an acceleration to the downside with the February 9, 2016 main bottom at $43.51 the next likely downside target.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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