Are CL Futures starting a new bull trend in 2025?Crude Oil WTI Nymex Futures
NYMEX:CL1!
Big Picture:
Crude Oil WTI NYMEX Futures Update – January 2025
Crude Oil WTI NYMEX futures are trading higher, with bullish price action evident at the start of 2025. Price has broken above the 2024 Composite Value Area High (CVAH) and is now approaching the Composite Value Area High from the 2022 high, as shown in the chart above.
Macroeconomic Outlook
From a global perspective, persistent inflation may be supported by elevated commodity prices. Higher crude oil prices, coupled with potential trade wars and tariffs, could drive up costs in major sectors, such as rare earth minerals.
In this scenario, we anticipate central banks, including the Federal Reserve, maintaining higher interest rates. We believe the previously expected two rate cuts of 25 basis points each for this year may be reduced to zero. However, this creates a challenging environment for central banks. A combination of sticky inflation, resilient job markets, and low unemployment could lead to a "goldilocks" scenario. Recessionary risks will be increased unless some means of fiscal policy measures provide further support to the US economy.
Key Levels to Watch
Key levels represent areas of interest and zones of active market participation. The more significant a key level, the closer we monitor it for potential reactions and trade setups in alignment with our trading plan.
CVAH: 79.50
Resistance R1: 79.50 – 79.85
Resistance R2: 81.30 – 81.60
Neutral Level: 78.77
CVAH 2024 / Support: 75.00
Support (Yearly Open): 71.85
Scenario 1: Exhausted Buyers, Mean Reversion
In this scenario, we anticipate range-bound price action, offering a potential short opportunity if buyers appear exhausted. Price action and volume analysis would need to confirm this. Look for absorption around the neutral zone or below R1/CVAH, with prices failing to push higher. A lower high and seller dominance would confirm a mean reversion short setup.
Scenario 2: Breakout Above CVAH
A confirmed breakout above CVAH could indicate further bullish price discovery and the potential for a new uptrend. Consolidation above CVAH followed by strong price action would provide a trigger for long positions. However, significant resistance at this level necessitates confirmation via price action and volume analysis before taking action.
Scenario 3: Swing Failure at CVAH
In this scenario, prices rise above the neutral zone and R1/CVAH, but sellers regain control, pushing prices lower. A swing failure candle with a long wick near the resistance zone would indicate the failure. A subsequent higher low could present a short opportunity for a mean reversion trade.
We encourage you to monitor these levels closely and incorporate them into your trade planning. Share your thoughts or insights on these key levels in the comments below.
