U.S. West Texas Intermediate crude oil futures finished sharply lower on Thursday and in a position to challenge its December 24, 2018 main bottom at $45.92. The market is also poised to move lower for sixth straight session on Friday, while remaining on track to close the week more than 12% lower. This would mark its biggest weekly decline in more than four years.
On Thursday, April WTI crude oil settled at $47.09, down $1.64 or -3.37%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $45.88 will reaffirm the downtrend.
The nearest resistance is the main top at $54.66. A trade through this price level will change the main trend to up. This is highly unlikely, however.
Today’s session begins with the market down six sessions from its last main top at $54.66. Typically, we start to look for potentially bullish closing price reversal bottom between 7 and 10 days from the last main top. So start looking for bottoming action next Monday through Thursday.
Lower tops and lower bottoms are the definition of a downtrend. Lower highs and lower lows define a downswing. Taking out Thursday’s low at $45.88 will confirm the current downswing. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the January 20, 2016 main bottom at $43.55.
Although we typically look for closing price reversal bottoms in 7 to 10 days from a top, due to the huge loss in price on the current downswing, we’re not going to ignore a closing price reversal bottom on the sixth day down. So pay attention to yesterday’s close at $47.09. It’s going to begin Friday’s session as resistance, but overcoming this level on an intraday basis could spook some of the weaker short-sellers into covering their positions. This move would be an early indication of a short-term bottom.