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Oil Technical Forecast: Oil Snaps Back as WTI Threatens 8-Week Rally

Crude Oil Technical Forecast: WTI Weekly Trade Levels

  • Crude Oil updated technical trade levels – Weekly Chart
  • WTI rally may be vulnerable into uptrend resistance- constructive while above monthly open
  • New to Oil Trading? Get started with this Free How to Trade Oil-Beginners Guide
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Oil prices are attempting to snap an eight-week rally with WTI threatening the first down-week of the year and only the third since the December low. The reversal off uptrend resistance may limit the topside near-term and offer more favorable opportunities ahead within the broader rally. 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

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

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

Notes: In my last Crude Oil Technical Forecast we noted that the WTI rally was heading into Fibonacci resistance near 90.68, “with a topside breach likely to fuel another accelerated push towards the upper parallels.” Oil ripped through resistance the following week with price now testing the upper parallel of the ascending pitchfork we’ve been tracking since last year. Note that in previous instances, multi-month rallies have failed into this slope and the focus is on a reaction this week.

Initial weekly support rests at the 75% parallel near ~88.40s backed by the 2013 low at 85.61 with bullish invalidation now raised to the 2021 high-week close at 83.28– losses should not exceed this threshold IF price is indeed heading higher. A topside breach from here set the focus on 100 where you’re likely to get more back & forth price action.

Bottom line: The oil price rally has extended more than 50% off the December lows with WTI now testing uptrend resistance – the immediate rally may be vulnerable while below the monthly high-day close at 94.76. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should limited to the monthly open at 88.13 IF price is heading higher on this stretch with a topside breach from here likely to once again fuel another accelerated run towards 100. Note that IF price should fail up here, the wash-out could be rather intense with broader uptrend support steady at the 2011 low / 2022 yearly open at 74.94-75.35. Stay tuned – things are about to get very interesting. I’ll publish an updated Crude Oil Price Outlook once we get further clarity on the near-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 Forecast

  • 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 weak bullish reading
  • Long positions are6.68% higher than yesterday and 17.99% higher from last week
  • Short positions are0.99% lower than yesterday and 8.27% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil – US Crude prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil – US Crude price trend may soon reverse lower despite the fact traders remain net-short.

Previous Weekly Technical Charts

— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex