U.S. West Texas Intermediate crude oil futures hit their lowest level in more than a year last week, but the market still managed to close higher for the period. This could be a sign that the buying is greater-than-the-selling at current price levels. The rebound in prices was fueled by reports that Russia had agreed to team with an OPEC-led group to cut production in an effort to reduce supply and stabilize prices.
Last week, January WTI crude oil settled at $50.93, up $0.51 or +1.01%.
Weekly Swing Chart Technical Analysis
The main trend is down according to the weekly swing chart. However, momentum may be getting ready to shift to the upside with the formation of a closing price reversal bottom last week.
A closing price reversal bottom will not indicate a change in trend, but a shift in momentum to up. A trade through $52.56 will confirm the chart pattern. This could trigger the start of a 2 to 3 week rally. A move through $49.41 will negate the chart pattern and signal a resumption of the downtrend.
Weekly Swing Chart Technical Forecast
Based on last week’s chart pattern and close at $50.93, the direction of the January WTI crude oil market this week is likely to be determined by trader reaction to last week’s high at $52.56.
Taking out $52.56 will confirm last week’s potentially bullish closing price reversal bottom. Sustaining the rally will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the rally to extend into the major Fibonacci level at $54.79.
Since the main trend is down, sellers could come in on the first test of $54.79. Overtaking it could trigger an acceleration to the upside with $58.95 the next likely upside target.
The inability to sustain a rally following a breakout over $52.56 or a sustained move under this level will signal the presence of sellers. This could lead to a retest of last week’s low at $49.41. Taking out this level could drive the market into a pair of main bottoms at $47.96 and $46.00.