Crude Oil Price Update – Trader Reaction to Major Fibonacci Support at $46.04 Sets the Tone into Close

U.S. West Texas Intermediate crude oil futures are trading lower on Monday after OPEC said global oil demand will rebound more slowly in 2021 than previously thought because of the lingering impact of the coronavirus pandemic. Oil prices gave up earlier gains on the news.

At 15:51 GMT, February WTI crude oil is trading $46.43, down $0.32 or -0.68%. This is down from an intraday high of $47.57.

Earlier in the session, oil prices rose on hopes that a rollout of coronavirus vaccines will lift global fuel demand while a tanker explosion in Saudi Arabia jangled nerves in the market.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside.

A trade through $47.88 will signal a resumption of the uptrend. The main trend will change to down on a move through $45.14.

The market is currently trading on the strong side of a long-term retracement zone at $46.04 to $42.45. This is helping to generate some of the upside momentum. This zone is now longer-term support.

Daily Swing Chart Technical Forecast

The early price action suggests the near-term direction of the February WTI futures contract is likely to be determined by trader reaction to the long-term Fibonacci level at $46.04.

Bullish Scenario

A sustained move over $46.04 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into $47.88, followed by the March 3 top at $49.07.

Bearish Scenario

A sustained move under $46.04 will single the presence of sellers. This could trigger a further decline in the main bottom at $45.14. If this bottom fails then look for the selling to possibly extend into the next main bottom at $44.10.

Side Notes

We’re looking at a market that is potentially bearish short-term, but bullish long-term if it can hold above $46.04 to $42.45.

Due to the short-term bearish outlook and bullish long-term outlook, we’re likely to see the market form a trading range inside $42.45 to $46.04 over the near-term.

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