WTI reaching towards the 38.2% Fibo as bullish cup and handle plays out

WTI has been making tracks to the upside in 2019, recovering in part over 23.6% of the early Oct rout and is tracking down the key 38.2% Fibo located at 55.56. The markets remain optimistic for the price of oil, despite recent warnings from the IMF that cut its global growth forecasts on the back of increased trade tariffs between China and the United States. 

The Fund now projects a 3.5 percent growth rate worldwide for 2019 and 3.6 percent for 2020. These are 0.2 and 0.1 percentage points below its last forecasts in October — making it the second downturn revision in three months.

Speaking at the World Economic Forum in Davos, the IMF's Managing Director Christine Lagarde said: "After two years of solid expansion, the world economy is growing more slowly than expected, and risks are rising. But even as the economy continues to move ahead ... it is facing significantly higher risks."

However, last week's noise and subsequent optimism over negotiations between the U.S. and China that raised hope for an end to the trade dispute and separate data that pointed to further declines in global crude production is supporting the price of oil on Monday while markets are out on holiday.

Tomorrow, traders will be trading the 29th day of the partial US government shutdown. Investors may well start to show more concerns considering what the negative ramifications could be to the US economy over the prolonged shutdown. It has been estimated that the US economy will lose 0.1% of GDP every two weeks that the government stays closed which should have an impact on risk, stocks and the price of oil. Meanwhile, the scrutiny will also remain on U.S.-China trade even as no scheduled announcements or meetings are expected ahead of Chinese Vice-Premier Liu trip to Washington on January 30 and 31, where he is expected to meet US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin for top-level talks.

WTI levels

• Support levels: 53.53 52.94 51.85
• Resistance levels: 54.48 55.21 56.30

The price is within a bullish trend and bulls have kept with the bid, despite the weekly hanging man. Instead, the price has made a fresh high at the start of this week and bulls remain in charge. The bull run has the market targeting a test of the 38.2% Fibo retracements of the early Oct decline to YTD lows located in the 55.50s. So far, the daily cup and handle formation is playing out nicely.  MACD is turning high, and RSI still has plenty of room to go until overbought readings leaving the technical bias bullish.