Crude Oil Market Analysis: Decision Time
Published: January 7, 2026
Author: Anna Radomska
Current Market Situation
Crude oil prices have recently bounced off significant long-term support levels but are now facing strong resistance. The market is currently in a critical phase where short-term indicators suggest caution, while long-term trends indicate that this price area is crucial for future movements.
Technical Analysis
Daily Chart Insights
Crude oil managed to rise above a previously broken upper line of a declining wedge, marking a technical victory for bulls. However, this upward movement was quickly met with resistance from three major bearish factors:
- Upper border of a declining channel
- Top of a consolidation zone
- Resistance cluster on the H4 chart
This resistance led to a pullback, and despite some bullish signals on shorter timeframes, the presence of a bearish gap indicates that sellers are currently in control. A critical support zone has been established, and if this is breached, further declines towards the $55 region or even $50 could occur.
Long-Term Perspective
From a monthly chart perspective, crude oil is consolidating above significant support levels, including the 61.8% Fibonacci retracement of the 2020-2022 bull run. The $50 level is particularly important, as it represents a psychological barrier. Falling below this level could trigger a cascade of selling, reminiscent of the market's behavior in early 2020.
Potential Outcomes
Bearish Scenario
If crude oil closes below the current consolidation zone, a retest of the breakout point is likely. Should bulls fail to defend this level, prices could drop significantly.
Bullish Scenario
Conversely, if bulls can defend the nearest support zones and close the bearish gap, there is potential for a recovery towards the upper consolidation area.
Trading Strategy
This is a decision zone, and professional traders typically avoid making large bets in such uncertain conditions. The recommendation is to observe the market closely, marking key levels and waiting for a clear direction before committing capital. This approach minimizes risk and allows for better risk-reward opportunities when a definitive trend emerges.