Crude Oil Price Update – Weekly Chart Strengthens on Sustained Move Over $61.28

U.S. West Texas Intermediate crude oil futures closed sharply lower last week as hedge funds and money managers continued to add to short positions on concerns over increasing supply and fear of lower demand. The week ended with crude oil in bear market territory after dropping 20 percent from its October top.

For the week, January WTI Crude Oil settled at $60.36, down $2.78 or -4.40%.

The market is oversold by most conventional technical indicators, but far from changing the trend to up. However, it may be ripe for a short-covering rally. Over the week-end, Saudi Arabia announced it was cutting exports by 500,000 barrels in December. This news may be enough to spook a few of the weaker shorts out of the market.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. The trend turned down last week when sellers took out a pair of swing bottoms at $63.28 and $62.16. The next major downside targets come in at $54.78 and $54.06.

The short-term range on the weekly chart is $46.00 to $76.55. Its retracement zone at $61.28 to $57.67 is currently being tested.

The main range is $41.34 to $76.55. Its retracement zone is $58.95 to $54.79. This zone is potential support.

The contract range is $89.27 to $41.34. Its retracement zone at $65.31 to $70.96 is new resistance.

Weekly Technical Forecast

Based on last week’s close at $60.36, the direction of the January WTI Crude Oil market this week is likely to be determined by trader reaction to the 50% level at $61.28.

A sustained move under $61.28 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to continue into a 50% level at $58.95, followed by a Fibonacci level at $57.67. This is a potential trigger point for an acceleration into an uptrending Gann angle at $55.13.

A sustained move over $61.28 will signal the presence of buyers. If this generates enough upside momentum then look for a potential spike into a steep downtrending Gann angle at $64.55.

Basically, we’re looking for the market to strengthen on a sustained move over $61.28 and for it to weaken further on a sustained move under $58.95.