Crude Oil Price Update – Trader Reaction to Gann Angle at $55.69 Will Set the Tone for the Week

December West Texas Intermediate crude oil futures surged last week before closing on its high. This suggests there may be enough upside momentum to trigger a follow-through rally this week.

The rally is being driven by expectations that the OPEC-led program to cut production would be extended beyond its March 2018 deadline. Increased demand has also been supportive.

Gains could be limited by worries over increased U.S. shale production and a technically overbought market.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. If the upside momentum continues then the top at $58.44 from the week-ending January 6 will become the primary upside target.

Due to the prolonged move in terms of price and time, traders should watch for a potentially bearish closing price reversal top. The chart pattern is not likely to lead to a change in trend, but it should alleviate some of the upside pressure.

The main range is $58.44 to $43.08. Its retracement zone at $52.57 to $50.76 is news support.

Weekly Technical Forecast

Based on last week’s close at $55.64, the direction of the market this week is likely to be determined by trader reaction to the long-term downtrending angle at $55.69.

A sustained move over $55.69 will indicate the presence of buyers. This could trigger a rally into the next downtrending angle at $57.07. This is the last potential resistance angle before the $58.44 main top.

A sustained move under $55.69 will signal the presence of sellers. If the move gains momentum then look for a potential break into the nearest uptrending angle at $53.08.

Watch the price action and read the order flow at $55.69 all week. Trader reaction to this angle will tell us if the buying is getting stronger or if sellers are regaining control.