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WTI Crude Oil Setting Up for Steep Break under $80.56

By:
James Hyerczyk
Updated: Jan 24, 2022, 14:37 UTC

The direction of the March WTI crude oil market into the close on Monday is likely to be determined by trader reaction to the pivot at $84.94.

WTI Crude Oil

In this article:

U.S. West Texas Intermediate crude oil futures are trading lower on Monday, pressured by a stronger dollar and investor worries over the possibility of more aggressive policy action by the U.S. Federal Reserve.

At 14:16 GMT, March WTI crude oil futures are trading $83.78, down $1.36 or -1.60%. On Friday, the United States Oil Fund ETF (USO) settled at $60.79 or +0.13 or +0.21%.

The U.S. Dollar hit a two-week high against a basket of major currencies, boosted by the tension between Russia and the West over Ukraine and the possibility of a more hawkish stance from the Fed on Wednesday. A stronger dollar tends to drive down foreign demand for dollar-denominated crude oil.

Daily March WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on January 20.

A trade through $87.10 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $74.01 will change the main trend to down.

The minor trend is also up. A trade through $82.78 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is $87.10 to $82.78. The market is currently trading on the weak side of its pivot at $84.94, making it resistance.

The next downside targets are a pair of 50% levels at $82.22 and $80.56. The latter is a potential trigger point for an acceleration into another minor 50% level at $76.52 and the main retracement zone at $74.58 to $71.62.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil market into the close on Monday is likely to be determined by trader reaction to the pivot at $84.94.

Bearish Scenario

A sustained move under $84.94 will indicate the presence of sellers. Taking out the minor bottom at $82.78 will change the minor trend to down with $82.22 the next target.

Watch for a technical bounce on the first test of $82.22, but if it fails then look for the selling to possibly extend into $80.56.

We could see another technical bounce on a test of $80.56, but if this level is taken out with heavy selling then look for the move to possibly extend into $76.52 to $74.58.

Bullish Scenario

A sustained move over $84.94 will signal the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly lead to a retest of $87.10, followed by $88.18.

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About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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