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Crude Oil Price Technical Forecast: WTI Correction Nears Completion

Crude Oil Technical Forecast: WTI Weekly Trade Levels

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Crude oil prices plunged more than 30% off the yearly highs with the decline now approaching key levels of technical support – we’re on the lookout for a possible exhaustion low in the weeks ahead. These are the updated targets and invalidation levels that matter on the oil price weekly technical 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 Weekly Technical Forecast we noted that the WTI, “correction threatens a deeper cut in the weeks ahead- that said, we’re on the lookout for downside exhaustion near key measured levels lower down.” The decline stretched into initial support objectives at the 100% ext of the June sell-off at 91.86 before rebounding. Just lower, rests a more significant technical confluence at 85.61-88.01– a region defined by the 2013 low, the 100% extension of the March decline and the 61.8% Fibonacci retracement of the November rally.

We’re on the lookout to confirm a potential exhaustion low off one of these levels in the weeks ahead IF the broader multi-year oil uptrend is to remain viable. Initial weekly resistance now eyed at 103.19 with broader bearish invalidation now lowered to the June high-week reversal close / 61.8% retracement at 110.01-111.

Bottom line: The crude oil correction is now probing levels of interest for possible support. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – losses should be limited to 85.61 IF price is heading higher with a close above 111 needed to suggest a more significant low was registered this month / mark resumption of the broader uptrend. Keep in mind that a break below this multi-year uptrend would be technically significant and could fuel another bout of accelerated losses towards the 2011 lows / 2022 yearly open at 74.94-75.35. The battle lines are drawn heading into close of the month- stay nimble here. Review my latest Crude Oil Short-term Technical Outlook for a closer look at 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 - USOil Retail Positioning - CL Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-long crude oil – the ratio stands at +1.31 (56.62% of traders are long) – typically weak bearishreading
  • Long positions are0.96% lower than yesterday and 3.18% higher from last week
  • Short positions are11.03% higher than yesterday and 4.11% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Crude Oil prices 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 (WTI) 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