Crude Oil Price Update – Weakens Under $78.09, Strenghtens Over $79.04

U.S. West Texas Intermediate crude oil futures are edging lower on Friday as investors shrugged off the threat of rising supply, especially one fueled by coordinated releases by major economies of their official crude reserves.

Volatility and selling pressure were fueled on Wednesday following a Reuters report that the United States had asked China, Japan and other big buyers to join a release of crude stocks from Strategic Petroleum Reserves (SPR).

At 09:48 GMT, January WTI crude oil futures are trading $77.87, down $0.54 or -0.69%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has shifted to the upside following the confirmation of Thursday’s closing price reversal bottom. The confirmation of the chart pattern doesn’t change the trend to up, but it could trigger the start of a minimum 2 to 3 day counter-trend rally.

A trade through $83.30 will change the main trend to down. A move through $76.44 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through $80.68 will change the minor trend to up. This will confirm the shift in momentum.

The market is currently trading inside a pair of 50% levels at $78.09 and $79.04.

On the upside, the nearest resistance is a 50% level at $80.29.

On the downside, a pair of 50% levels at $76.22 and $75.25 are the nearest support.

Daily Swing Chart Technical Forecast

The direction of the January WTI crude oil futures contract on Friday is likely to be determined by trader reaction to $79.04.

Bearish Scenario

A sustained move under $79.04 will indicate the presence of sellers. The first downside target is $78.09, followed by $77.89.

If the market is going to move higher then look for counter-trend buyers to come in on a test of $77.89. If it fails to hold then look for the selling to possibly extend into $76.44 to $76.22.

A failure to hold $76.22 will indicate the selling pressure is getting stronger with $75.25 the next target. This level is the trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over $79.04 will signal the presence of buyers. This could trigger a surge into $80.29, followed closely by the minor top at $80.68. This price is a potential trigger point for an acceleration to the upside with the next major target $83.30 – $83.83.