Crude Oil Price Update – Closing Price Reversal Top Indicates Potential Momentum Shift

U.S. West Texas Intermediate crude oil posted a potentially bearish closing price reversal top on Monday after testing its highest level since January 3. Fear that increasing COVID cases in China would offset higher demand expectations following the easing of COVID restrictions helped put a lid on prices.

On Monday, March WTI crude oil futures settled at $79.11, down $1.00 or -1.25%. On Friday, the United States Oil Fund ETF (USO) finished at $70.05, up $1.44 or +2.10%.

The futures contract rose more than 8% last week for the biggest weekly gain since October after China abandoned what remained of its zero-COVID policy by reopening its borders on Jan. 8.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since January 5.

A trade through $72.74 will signal a resumption of the downtrend. A move through $81.62 will change the main trend to up.

On Monday, the market formed a closing price reversal top. A trade through $78.80 will confirm the chart pattern and shift momentum to the downside. This could trigger the start of a 2 to 3 day correction.

The main range is $89.89 to $70.56. Its retracement zone at $80.23 – $82.51 is resistance. This zone stopped a rally at $81.62 on Jan. 3 and today’s rally at $80.50.

The nearest support is a minor pivot at $77.18, followed by a short-term retracement zone at $76.09 – $74.78.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $80.23 is likely to determine the direction of the March WTI crude oil market on Tuesday.

Bearish Scenario

A sustained move under $80.23 will indicate the presence of sellers. Taking out $80.50 will indicate the selling pressure is getting stronger. This could create the momentum needed to challenge a pair of 50% levels at $77.18 and $76.09.

Bullish Scenario

A sustained move over $80.23 will signal the presence of buyers. Taking out $81.62 will change the main trend to up. This could trigger a surge into the Fibonacci level at $82.51, followed by another main top at $83.14.