U.S. West Texas Intermediate crude oil futures are trading higher late Monday after recovering from early session weakness. Prices traded lower early in the session over doubts of a trade deal between the United States and China, and extended OPEC production cuts.
However, the market posted a turnaround later in the session after positive comments from the United States and China rekindled hopes in global markets that the two economic powerhouses could soon sign an interim deal to end their trade war.
On Monday, December WTI crude oil settled at $57.91, up $0.14 or +0.24%.
Daily Swing Chart Analysis
The main trend is up according to the daily swing chart. However, momentum is trading slightly lower following Friday’s closing price reversal top and today’s subsequent confirmation of the chart pattern.
A trade through $58.74 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down when sellers take out the main bottom at $54.85.
The main range is $61.48 to $54.85. Its retracement zone at $57.36 to $56.08 is controlling the near-term direction of the market. On Monday, the upper or Fibonacci level of the range provided support.
The short-term range is $54.85 to $58.74. Its 50% level at $56.80 is additional support. It falls inside the main retracement zone.
Daily Technical Analysis
Monday’s price action indicates that buyers came in to defend the trend and the upper end of the retracement zone at $57.36.
Holding above $57.36 will indicate the buying is strong. This could drive the market into the downtrending Gann angle at $58.36. This angle played a role in forming Friday’s closing price reversal top.
Crossing to the strong side of this angle will indicate the buying is getting stronger. This could lead to a test of the closing price reversal top at $58.74. This is also the trigger point for an acceleration to the upside.
If $57.36 fails as support then look for the selling to possible extend into the short-term 50% level at $56.80. We could see a technical bounce on the first test of this level. If sellers take it out then look for the selling to possibly extend into the main 50% level at $56.08.
Basically we’re bullish because the trend is up, but the market has to hold above $57.36 to sustain the rally.
This article was originally posted on FX Empire
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