The next move by crude oil will be headline and momentum driven. If the headlines are bullish then buyers will make a run at the major 50% level at $58.95. If the headlines are bearish then sellers will attempt to resume the downtrend by taking out $54.90.
U.S. West Texas Intermediate crude oil futures are inching higher on Friday on speculation OPEC and other non-OPEC countries are planning to start withholding supply soon. Putting a lid on prices, however, are concerns over rising U.S. production. On Thursday, the U.S. Energy Information Administration reported a 10.3 million barrel surge in inventories in the week-ending November 9 to 442.1 million barrels, the highest level since early December 2017.
At 0638 GMT, January WTI crude oil futures are trading $57.14, up $0.46 or +0.81%. For the week, it’s down about 6-percent.
The main trend is down according to the daily swing chart. A trade through $54.90 will signal a resumption of the downtrend. However, we expect a labored move since former bottoms are stationed at $54.90, $54.06 and $53.74.
The minor trend is also down. A trade through $61.44 will change the minor trend to up. This is followed by the next minor top at $64.14.
The only retracement zone we are concerned about is $58.95 to $54.79. This zone is based on a monthly trading range so it’s very important to the longer-term structure of the market.
The next move by crude oil will be headline and momentum driven.
If the headlines are bullish then buyers will make a run at the major 50% level at $58.95. Overcoming this level will indicate the buying is getting stronger. If this generates enough upside momentum then look for the short-covering rally to extend into $61.44.
If the headlines are bearish then sellers will attempt to resume the downtrend by taking out $54.90. However, they may have a hard time driving prices sharply lower because of the cluster of potential support levels ranging from $54.79 to $53.74.
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.