U.S. West Texas Intermediate crude oil futures are trading lower during a highly volatile trading session that saw prices first rise, then post a new session low then rally to a new intra-day high before turning lower for the session.
The session started with bullish investors betting OPEC would agree to production cuts close to 1.4 million barrels per day. Prices tumbled more than 3 percent after a high-ranking Saudi official said he would be happy with a cut of 1 million barrels per day. Prices then spiked higher after U.S. government data showed U.S. stockpiles fell more than expected. However, sellers again drove prices lower after the OPEC meeting ended without a decision on specific quotas.
At 0605 GMT, January WTI crude oil is trading $50.94, down $2.31 or -4.34%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through $49.41 will change the main trend to down. A move through $54.55 will signal a resumption of the uptrend.
The main range is $49.41 to $54.55. Its 50% level or pivot at $51.98 is controlling the short-term direction of the market. Trading below this level today is giving crude a downside bias.
On the upside, the key resistance is a major Fibonacci level at $54.79. This is a potential trigger point for an acceleration to the upside.
Daily Technical Forecast
Based on the current price at $50.94, the direction of the January WTI crude oil futures contract into the close will be determined by trader reaction to the pivot at $51.98.
A sustained move over $51.98 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to continue into the downtrending Gann angle at $54.05.
Taking out $54.05 will indicate the buying is getting stronger. Overtaking $54.55 will reaffirm the uptrend. This should take the market to $54.79.
The major Fib at $54.79 is the trigger point for an acceleration to the upside. The daily chart indicates there is plenty of room to rally with the next major target coming in at $58.95.
A sustained move under $51.98 will signal the presence of sellers. If this move continues to generate downside momentum then look for the selling to extend into the main bottom at $49.41.
Taking out $49.41 will change the main trend to down with the next targets a pair of bottoms at $47.96 and $46.00.
This article was originally posted on FX Empire
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