WTI Crude oil prices posted strong gains as price of crude oil touched $62.19 a barrel last week.

The strong gains in oil prices has led many to upgrade their view for crude oil. However, Thursday’s doji which indicates a indecision in the markets suggests that oil prices might be in for a correction.

But the pace of the correction is expected to be limited. While our previous analysis in the past few weeks expected the correction to push down to the $50 handle, we now expect that oil prices could decline to $58.94, rounded off to $59.00 a barrel.

Technical Analysis on WTI Crude Oil

The technical chart for the Crude oil market shows that the upside breakout from the $59 handle late in December was marked by the bullish pennant pattern.

This pattern indicates a bullish continuation in the markets after a brief spell of consolidation.

However, what’s missing is the typical pull back that we get to see.

While price has rallied to the highs near $62, we expect that in the near term, a pull back in the oil markets could see WTI crude oil retesting the breakout level near the $59 handle.

This level had previously served as resistance and as a result, retesting this level for support is widely expected. How price action behaves following this correction is of course anyone’s guess.

In the best case scenario, we expect crude oil prices to rebound from this support level.

The bullish pennant pattern gives an upside target to $65.00 that could be reached on a successful rebound off the support level.