Crude Oil Technical Forecast: WTI Near-term Trade Levels

Crude oil prices are attempting to break fresh multi-month lows and the focus is on a possible stretch towards downtrend support for guidance early in the month. The battle-lines are drawn heading into the August open. 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

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

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

Technical Outlook: In last month’s Crude Oil Short-term Technical Outlook we noted that, “The crude oil price plunge is now approaching key areas of support –we’re on the lookout for possible price inflection just lower. From a trading standpoint, rallies / recoveries should be capped by the monthly open – look to reduce short-exposure / lower protective stops on stretch towards 85.60-88.01 IF reached.” The medium-term outlook remains unchanged with a break below the March / April low-day closes at 95.15 further highlighting the risk for a test of key support at the confluence of the 2013 low, the 100% extension of the yearly decline and the 61.8% Fibonacci retracement of the December advance. We’re looking for a reaction in price there IF reached.

Crude Oil Price Chart – WTI 240min

Crude Oil Price Chart - WTI 240min - CL Short-term Trade Outlook - USOil Technical Forecast

Notes: A closer look at oil price action shows WTI trading within the confines of a descending channel off the July high. Resistance eyed at the May low / weekly open at 98.18/27 with a breach / close above last week’s high at 101.86 needed to shift short-term focus higher again in crude. Keep in mind that weakness beyond 85.60-88.01 would be technically damaging and could risk another bout of accelerated losses towards the 2021 HDC at 83.69 and the 2018 high / 2012 low at 76.87-77.68.

Bottom line: 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. Ultimately a breach of the monthly range highs would be needed to alleviate further downside pressure in crude prices. 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

Crude Oil Trader Sentiment - WTI Price Chart - CL Retail Positioning - USOil Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-long crude oil – the ratio stands at +2.04 (67.07% of traders are long) – typically bearishreading
  • Long positions are4.01% lower than yesterday and 18.47% higher from last week
  • Short positions are0.20% higher than yesterday and 2.13% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests WTI prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed Crude Oil trading bias from a sentiment standpoint.

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex





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