Crude Oil Price Update – Sideways Trade Indicates Trader Indecision, Impending Volatility
U.S. West Texas Intermediate crude oil futures are trading higher on Monday shortly after the regular session opening. The market is trading inside Friday range which tends to indicate investor indecision and impending volatility. In fact, the market has been trading inside last Tuesday’s wide range for four sessions.
Fundamentally, prices are being capped by concerns over rising supply and lower demand. At the same time, the market is being underpinned by expectations OPEC and its allies are planning to announce production cuts at its December 6 meeting in Vienna.
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At 1300 GMT, January WTI Crude Oil is trading $56.89, up $0.21 or +0.37%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The market is in no position to change the main trend to up, but it is susceptible to a closing price reversal bottom.
A trade through $54.90 will signal a resumption of the downtrend. This is followed by layers of main bottoms at $54.78, $54.06 and $53.74. The daily chart will open up to the downside under $53.74 with $51.17 the next major downside target.
The minor trend is also down. It will turn up on a trade through $61.44.
Crude oil is also trading inside a major retracement zone at $58.95 to $54.79. Trader reaction to this zone will determine the near-term trend of the market.
Daily Technical Forecast
Based on the early price action and for that matter, the price action the last five sessions, the direction of the January WTI Crude Oil market today is likely to be determined by trader reaction to the 50% level at $58.95 and the Fibonacci level at $54.79.
Bullish Scenario
Taking out $58.95 and sustaining the move will indicate the presence of buyers. This could trigger a rally into a downtrending Gann angle at $60.05. Since the main trend is down, sellers could return on the first test of this angle.
Taking out $60.05, however, will indicate the buying is getting stronger with the next target the minor top at $61.44.
Bearish Scenario
Taking out $54.79 and sustaining the move under this Fib level will signal the return of sellers. However, the next break is likely to be labored because of bottoms at $54.78, $54.06 and $53.74. However, the chart opens up to the downside under $53.74.