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WTI Crude Oil Price Tests Neckline Resistance; Resistance at $56.00 Eyed

crude oil prices
crude oil prices

WTI crude oil CFDs traded higher for the most part yesterday and despite concerns with the coronavirus outbreak, losses on the commodity were limited. It finished yesterday’s trading at $51.48, 12 cents below its opening price.

Earlier this week, risk aversion dominated market sentiment as China reported close to 15,000 new cases of the coronavirus overnight. According to officials, they changed their diagnostic methodology which suggests that the surge is an outlier. Today, only 5,090 new cases reported from China.

Without any major report scheduled for today, crude oil price will likely take its cue from sentiment. Negative developments surrounding the coronavirus will likely be bearish while signs that the outbreak is being effectively contained could be bullish for it.

Read our Best Trading Ideas for 2020.

Crude Oil Price Outlook

The double bottom pattern on the 4-hour time frame is still valid. In forex trading, this chart pattern is considered as a bullish reversal signal. A strong close above the neckline resistance at $52.17 could trigger a bigger rally on crude oil price. If this happens, the commodity may soon trade higher to $56.05 and test resistance at the 200 SMA.On the other hand, a closer look at the hourly time frame shows that crude oil price is struggling to trade past the neckline resistance. This suggests that we could see it drop first before it rallies. By connecting the lows of February 10 and February 11, we can see that crude oil price has room to trade lower to $50.65 and still maintain its uptrend. This price also coincides with the 100 SMA and 200 SMA which may also offer it with support.