Last week saw front month WTI retrace higher and close just below the 50% level of the decrease from $79 to 69. Monday's price action lower represented the ninth day that WTI price fell, the doji candlestick formation on that day implied that selling fatigue was setting in and signalled a pause or reversal was likely. Indeed, short covering on Tuesday lifted prices and was followed through with strong buying activity on Wednesday based on a bullish EIA Weekly Petroleum Status Report. Thursday put in a bearish hanging man candlestick, which was the result of a strong USD putting a cap on commodity prices in general. Friday's bearish shooting star candlestick price action is quite remarkable given that there was news that Iran's military had crossed over into Iraq to seize a disputed oil well site. It goes without saying that geopolitical military activity in the Middle East normally has a bullish effect on oil traders. In the end, the market discounted the incursion as relatively minor, particularly given the strong bullish performance the USD put in last week.
Friday's close suggests that there will be a pause (resistance at ~75) or a reversal lower in WTI pricing in the trading days ahead, Feb10 becomes the front month contract on Tuesday. If the USD continues to rally strongly, the WTI reversal could be significant and it may be the start of a continuation of the $79 to 69 decline, targeting mid-60s as next support level.