Last week we pointed out how the front month WTI crude oil contract had set a nearly six-year daily and weekly low close. We also noted that the on Jan. 22 the front month contract broke below a trendline dating back to the $10.65 low from December 1998. The weekly close settled below that trendline and crude traded lower this week, with the trendline, roughly at $46.50, serving as overhead resistance (see chart below).
That resistance held up until the last hour of trading on the last day of the month (see chart below). The fact that crude rallied above the trendline to maintain a monthly close brings in—depending on how you view trendlines—the possibility that a low was set.
Phil Flynn indicated that earlier this week and says, “There’s a good chance we have seen the bottom.”
Regardless of whether or not you believe a low was set in crude oil, the late activity on Friday that pushed the price back above a 17-year trendline ($46.65) is an indication that this is a significant pivot area for crude.