Crude Oil Price Update – Trend Up, but Low Holiday Volume Could Limit Gains

U.S. West Texas Intermediate crude oil futures hit their highest level since December 7 on Friday, helped by another strong performance in U.S. equity markets. The catalyst behind the gains was news that China proposed a plan to eliminate its trade surplus with the United States at the first round of mid-level trade negotiations in early January.

On Friday, March WTI crude oil settled at $54.04, up $1.68 or +3.21%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the last swing top at $53.61. A trade through $50.66 will change the main trend to down.

The minor trend is also up. A trade through $51.29 will change the minor trend to down. This will also shift momentum to the downside.

The main range is $54.98 to $42.67. Its retracement zone is $50.28 to $48.83. Trading above this zone is helping to give the market an upside bias. This zone should be considered support.

On the upside, the major target is the 50% level at $59.48.

Daily Swing Chart Technical Forecast

Based on Friday’s close at $54.04, the direction of the March WTI crude oil market in Monday’s holiday shortened session will be determined by trader reaction to the former main top at $53.61.

Bullish Scenario

A sustained move over $53.61 will indicate the presence of buyers. This will also indicate that Friday’s move was fueled by real buying rather than just buy stops. If the upside momentum continues then we could see a test of the December 4 main top at $54.98. We could see a technical bounce on the first test of this level, however, it is also the trigger point for an acceleration to the upside with the next major target coming in at $54.98.

Bearish Scenario

A sustained move under $53.61 will signal the presence of sellers. This could trigger a labored break with potential targets coming in at $52.40, $51.29 and $50.66.

If $50.66 fails as support then look for the selling to extend into the main retracement zone at $50.28 to $48.83.