Crude Caught at Resistance- WTI Breakout Pending


Crude Oil Technical Forecast: WTI Near-term Trade Levels

  • Crude Oilupdated technical trade levels & sentiment – Daily & 120min Charts
  • WTI ranges below long-term downtrend resistance– risk for further losses while below 42.34
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Crude oil prices plummeted more than 14% into the start of September trade with WTI continuing to hold within the monthly opening-range. Prices are coiling and the near-term recovery remains vulnerable while below multi-year trend resistance. These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this crude oil price setup and more.

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Crude Oil Price Chart – WTI Daily

Crude Oil Price Chart - WTI Daily - CL Trade Outlook - USOil Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Crude Oil (WTI) on Tradingview

Technical Outlook: Crude oil turned just ahead of long-term downtrend resistance into the start of September with the WTI decline covering nearly three-months in just over a week. I’m not thrilled with the daily chart here but the immediate focus is on a break of a well-defined monthly opening-range for guidance with the risk remaining for a larger correction while below slope resistance.

Daily resistance is eyed at the 2017/2018 lows at 42.05/34 and is backed closely by the objective September open at 42.80– we’ll reserve this threshold as our broader bearish invalidation level with a breach / close above the September range highs needed to validate a larger trend reversal in crude oil prices. Support rests at the mid-June close low / September opening-range low at 36.11/12with a break /c lose below exposing the 100% extension at 33.82.

Crude Oil Price Chart – WTI 120min

Crude Oil Price Chart - WTI 120min - CL Trade Outloook - USOil Technical Forecast

Notes: A closer look at crude oil price action shows WTI trading within the confines of a descending pitchfork formation extending off the July / August highs with a rebound off the lower parallel now trading within an embedded ascending channel formation. Initial support rests with the July 2016 low at 39.17 with the near-term bullish invalidation set to the 61.8% Fibonacci retracement of the mid-month rally at 38.15– look for a larger reaction there IF reached. A topside breach above confluence resistance at 42.02/34 would shift the focus back towards the February low/ 100% extension at 43.83/99.

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Bottom line: Oil prices continue to trade within the monthly opening-range with the immediate recovery vulnerable into the 42-handle. From a trading standpoint, look for a reaction on a stretch towards the upper parallel for guidance with a break below 38.15 needed to shift the near-term focus lower again in WTI. Review my latest Crude Oil Weekly Price Outlook for a closer look at the longer-term WTI technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment - WTI Price Chart - CL Trade Outlook - USOil Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-long crude oil – the ratio stands at +1.47 (59.52% of traders are long) – weak bearish reading
  • Long positions are 2.38% lower than yesterday and 13.14% lower from last week
  • Short positions are4.59% lower than yesterday and 12.07% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil – US Crude prices may continue to fall. Traders are more net-long than yesterday but less net-long from last week. The combination of current positioning and recent changes gives us a further mixed Oil – US Crude trading bias from a sentiment standpoint.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 1% 4% 2%
Weekly -3% -11% -7%

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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