Crude Oil Price Update – Testing Monthly Retracement Zone at $58.95 to $54.79

U.S. West Texas Intermediate crude oil futures plunged to nearly one-year low on Tuesday as sellers continued to react to President Trump’s urging of OPEC and Saudi Arabia to maintain current policy of gradually increasing output. The selling pressure has been strong enough to flip the market from bullish and testing a 4-year high to a technical bear market by dropping over 20% from its 52-week high. Sentiment has also shifted with traders no longer worried about a supply shortage, but concerned about a supply glut.

On Tuesday, January WTI Crude Oil settled at $55.84, down $4.24 or -7.59%.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through the next two main bottoms at $54.78 and $54.06 will reaffirm the downtrend. The bottom at $54.06 is also the trigger point for a potential acceleration into the next two main bottoms at $47.96 and $46.00.

The market is in no positon to change the trend to up. The best sign of a short-term bottom will be a closing price reversal bottom chart pattern.

The main range is $41.34 to $76.55. The market is currently testing its 50% to 61.8% retracement zone at $58.95 to $54.79. This zone is controlling the longer-term direction of the market.

The short-term range is $46.00 to $76.55. The market traded through its retracement zone at $61.28 to $57.67 on Tuesday. This zone is a minor resistance area.

The major resistance is the retracement zone at $65.31 to $70.96.

Weekly Technical Forecast

Based on this week’s price action, the direction of the January WTI Crude Oil futures contract the rest of the week is likely to be determined by the uptrending Gann angle/Fibonacci support cluster at $55.13 to $54.79.

Bullish Scenario

Holding above $55.13 will indicate that buyers are trying to defend the market against another steep break. If this generates enough short-covering then look for a possible test of a Fib level at $57.67 and a 50% level at $58.95. Crossing over $60.36 will put the market higher for the week.

Bearish Scenario

A sustained move under the Fibonacci level at $54.79 will signal that the selling pressure is getting stronger. If it’s strong enough to take out the bottoms at $54.78 and $54.06 then look for it to possibly extend into the next uptrending Gann angle at $50.56. This is the last major uptrending Gann angle before the $46.00 main bottom.