Crude Oil Technical Forecast: Pending Oil Price Breakout- WTI Levels

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CRUDE OIL TECHNICAL FORECAST: WTI WEEKLY TRADE LEVELS

• Crude Oil updated technical trade levels – Weekly Chart
• WTI rally testing technical resistance- consolidation breakout in focus
• New to Oil Trading? Get started with this Free How to Trade Oil-Beginners Guide

 

Oil prices are attempting to mark a fifth consecutive weekly advance with WTI trading just below technical resistance into 115. While the broader outlook remains tilted to the topside, the immediate focus is on a breakout of a multi-month range just above uptrend support. 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 my last Crude Oil Technical Forecast we noted that WTI was coiling, “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.” More than two-weeks later and the range has indeed tightened with price rallying into resistance last week at the 2011 high / 61.8% Fibonacci retracement of the March decline at 114.80-115.47. Initial weekly support now raised to the 61.8% retracement of the April rally at 101.55.

The focus heading into the close of the month will be on a breakout of the 101.55-115.47 range for guidance. A topside breach / close above would be needed to mark resumption of the broader uptrend 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 would threaten a larger correction with such a scenario keeping the focus on 85.61-88.01- broader bullish invalidation now raised tot his threshold.

Bottom line: Oil prices remain in consolidation here just below confluent resistance at last week’s high. From a trading standpoint, a good zone to raise protective stops- losses should be capped by 101.55 IF price is indeed heading higher on this stretch with a breach / close above 115.47 needed to fuel the next leg higher. Watch the weekly close here and stay nimble heading into the extended holiday weekend / close of the month.

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-short crude oil - the ratio stands at -1.37 (42.18% of traders are long) – typically bullish reading
• Long positions are0.34% higher than yesterday and 2.53% lower from last week
• Short positions are1.15% lower than yesterday and 19.47% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests crude oil prices may continue to rise. Traders are less net-short than yesterday but more net-short from last week. The combination of current positioning and recent changes gives us a further mixed Oil trading bias from a sentiment standpoint.

ACTIVE WEEKLY TECHNICAL CHARTS

• US Dollar Index (DXY)
• S&P 500, Nasdaq, Dow
• New Zealand Dollar (NZD/USD)
• Gold (XAU/USD)
• Canadian Dollar (USD/CAD)
• British Pound (GBP/USD)
• Australian Dollar (AUD/USD)

--- Written by Michael Boutros, Technical Strategist with DailyFX