Oil Coil Continues- WTI Breakout Levels


Crude Oil Technical Forecast: WTI Weekly Trade Levels

Oil prices plunged more than 6% this week with WTI continuing to contract within massive consolidation range. While the broader outlook remains constructive, the near-term focus is on a breakout for guidance with the bulls looking to validate a low in the weeks ahead. These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latest Strategy Webinar for an in-depth breakdown of this crude oil price technical setup and more.

Crude Oil Price Chart – WTI Weekly

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

Notes: In last month’s Crude Oil Technical Forecast we noted that WTI was, “searching for a low on this pullback and while the broader outlook remains constructive, near-term the threat is for a deeper flush-out here.” A full-month later and prices have continued to coil just above the 50% retracement of the December advance at 95.91- we’re on the lookout for a breakout in the weeks ahead as this range tightens.

Weekly resistance stands at 114.80-115.47 – a region defined by the yearly high-close, the 2011 high and the 61.8% Fibonacci retracement of the March decline. A breach / weekly close above this threshold is needed to validate resumption of the broader uptrend back towards the 2008 high-week close at 129.29 and the record high close / 2008 high at 145.29-146.73. A break below weekly support at 95.91 would open the possibility for a larger correction with such a scenario keeping the focus on 85.61-88.01 – even if this is just a simple correction, a dip towards 80.70 (two-equal legs off the highs) would still keep the broader uptrend viable.

Bottom line: Oil prices in contraction just above former slope resistance, now support. From a trading standpoint, the focus is on a breakout of this range for guidance- ultimately 88 & 80.70 remain areas of interest for downside exhaustion IF reached with a breach / close above 115.47 ultimately needed to mark uptrend resumption.

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 Retail Positioning - Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-long crude oil – the ratio stands at +1.49 (59.80% of traders are long) – typically bearishreading
  • Long positions are3.72% higher than yesterday and 3.48% higher from last week
  • Short positions are30.10% higher than yesterday and 16.37% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil – US Crude price trend may soon reverse higher despite the fact traders remain net-long.

Active Weekly Technical Charts

— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex





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