Crude Oil Price Update – Holding Above $47.80 Could Create Momentum Needed to Breakout Over $49.43
After a slight delay, U.S. West Texas Intermediate crude oil futures are trading higher early Monday after U.S. President Donald Trump signed a $2.3 trillion coronavirus aid and spending package, although lingering worries about near-term demand could keep a lid on prices.
Last week, crude oil prices closed lower, while ending a seven week winning streak. The market broke sharply last Monday on reports of a new highly infectious variant of the coronavirus, which was first seen in Britain and has now been detected in several other countries.
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Later in the week, the market was boosted by a bullish U.S. government crude oil report, but it never recovered from its earlier loss.
At 09:51, February WTI crude oil futures are trading $48.94, up $0.71 or +1.47%.
Traders are going to continue to weigh the rollout of the vaccines against the impact on demand from renewed shutdowns. Right now, it looks as if they are betting the vaccinations will bring a fast end to the demand issue.
Next week, traders are going to have to deal with the OPEC+ meeting. Analysts expect officials to agree to raise output by 500,000 barrels per day starting February 1.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $49.43 will signal a resumption of the uptrend. The main trend will change to down on a move through $46.16.
The minor trend is also up. A trade through $47.50 will change the minor trend to down. This will also shift momentum to the downside.
The minor range is $49.43 to $46.16. Its 50% level at $47.80 is support.
The major support is the long-term Fibonacci level at $46.04.
Daily Swing Chart Technical Forecast
The direction of the February WTI crude oil market the rest of the session on Monday will be determined by trader reaction to the pivot at $47.80.
Bullish Scenario
A sustained move over $47.80 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to attempt a breakout over the main top at $49.43. Be careful buying strength, however, due to the low volume.
Bearish Scenario
A sustained move under $47.80 will signal the presence of sellers. Taking out the minor bottom at $47.50 will shift momentum to the downside. This could trigger an acceleration to the downside with $46.16 to $46.04 the next likely downside target.
Side Notes
Just an early warning. We could see the start of a steep decline if $46.04 fails as support.
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