U.S. West Texas Intermediate crude oil futures plunged more than 5% on Friday, posting at 4.50% loss for the week and snapping a 3-week winning streak. Nonetheless, it did manage to close 1.70% higher for the month.
Traders blamed the steep loss on a combination of thin post-holiday trading volume and the resignation of Iraq’s prime minister after weeks of deadly protests, as well as position-squaring ahead of the OPEC + meeting on December 5-6.
On Friday, January WTI crude oil settled at $55.17, down $2.94 or -5.06%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $54.85 will change the main trend to down. A move through $58.74 will signal a resumption of the uptrend.
The minor trend is down. It turned down on Friday when sellers took out the minor bottom at $57.21. This move shifted momentum to the downside.
The main range is $61.48 to $50.69. Its retracement zone at $56.08 to $57.36 is controlling the longer-term direction of the market. This zone is new resistance.
The short-term range is $50.69 to $58.74. Its retracement zone at $54.72 to $53.77 is the next downside target zone.
Not only did January WTI crude oil settle on the weak side of the main retracement zone, but it also closed on the bearish side of an uptrending Gann angle that had been guiding the market higher since October 3. This angle came in at $55.82 on Friday.
The market is likely to continue to feel downside pressure as long as it continues to trade on the weak side of the Gann angle at $55.82 and the main 50% level at $56.08. The angle and the 50% level will form an important resistance cluster at $56.08 on December 3.
If the downside momentum continues on Monday then look for sellers to try to take out the main bottom at $54.85.
Taking out $54.85 will change the main trend to down, but traders are going to have to be careful selling weakness because of the short-term retracement zone at $54.72 to $53.77.
Buyers could step in on a test of $54.72 to $53.77 ahead of the OPEC meeting. This could trigger a strong short-covering rally.
So essentially, traders have possible 50% resistance at $56.08 and possible 50% support at $54.72.
This article was originally posted on FX Empire
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