Crude Oil Technical Forecast: WTI Near-term Trade Levels

• Crude Oil updated technical trade levels – Daily & Intraday Charts
• WTI plunges into key downtrend support- Weekly / monthly range breakouts pending
• New to Oil Trading? Get started with this Free How to Trade Oil-Beginners Guide

Crude oil prices have plunged into a critical support barrier which has halted the sell-off for the past two-weeks. This technical support zone remains in focus with the monthly range still intact into the close of the week. We’re on the lookout for the breakout to offer guidance. These are the updated targets and invalidation levels that matter on the oil price technical charts. Review my latest Strategy Webinar for an in-depth breakdown of this crude oil price technical setup and more.

Crude Oil Price Chart – WTI Daily

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

Technical Outlook: In my last Crude Oil Short-term Technical Outlook we noted that, “The crude oil sell-off is approaching confluent downtrend support and we’re on the lookout for possible downside exhaustion. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 85.61-88.01 IF reached.” WTI dropped into this critical support zone the following day with price continuing to test this threshold for the past two weeks. We’re looking for price inflection off this zone with the immediate short-bias vulnerable while above. Near-term bearish invalidation now raised to 94.66-95.57– a region defined by the 23.6% Fibonacci retracement of the June decline, the March / April low-day closes and the 200-day moving average.

Crude Oil Price Chart – WTI 240min

Notes: A closer look at oil price action shows WTI continuing to trade within the confines of a descending channel with median-line further highlighting key support this week at 85.61-88.01 (this week’s low registered at 85.70). Note that both the weekly and monthly opening-ranges are preserved heading into the close on Thursday – we’ll be looking for the breakout to offer further guidance. A topside breach would threaten a larger recovery towards subsequent resistance objectives at the June low (101.52), the 105– pivot zone and the 61.8% retracement / March 9th reversal-close at 109.16/61. A break below this key support zone would be extremely damaging from a technical standpoint with such a scenario exposing the 2021 high day close at 83.68 and the 2018 high / 2012 low at 76.87-77.26.

Bottom line: Bears on notice- Crude oil prices are testing a critical support zone we’ve been tracking for months now – the focus is on inflection off this threshold with a close below needed to keep the short-bias viable. From a trading standpoint, risk is for downside exhaustion while above 85.61 with a breakout of the weekly / monthly range highs at needed to suggest a more significant low was registered this week. Review my latest Crude Oil Weekly Price Forecast for a closer look at the long-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

• A summary of IG Client Sentiment shows traders are net-long crude oil – the ratio stands at +2.01 (66.77% of traders are long) – typically bearishreading
• Long positions are13.54% lower than yesterday and 2.50% lower from last week
• Short positions are21.50% higher than yesterday and 2.78% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests oil prices (WTI) may continue to fall. Yet traders are less net-long than yesterday and compared with last week. From a sentiment standpoint, the recent changes in positioning warn that the current oil price trend may soon reverse higher despite the fact traders remain net-long.

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex