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WTI Crude Oil Technical Forecast: Morning Star Candlestick Pattern Hints at Higher Prices

WTI Crude Oil Technical Forecast: Morning Star Candlestick Pattern Hints at Higher Prices

Zain Vawda, Analyst

WTI TECHNICAL OUTLOOK: NEUTRAL

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WTI WEEK IN REVIEW

Crude Oil has had an interesting week to say the least with three days of significant losses followed by a bullish resurgence. The early part of the week saw renewed demand concerns as China announced lockdowns in certain districts while US inventories came in better than expected dragging oil prices back below the $90 a barrel level.

US API data on oil stocks released on Tuesday indicated an increase of inventories by 5.61 million barrels for the week ended November 4. This was followed by the US Energy Information Administration (EIA) who reported a 3.9 million barrel build up over the same period with consensus forecasts sitting at 1.36 million barrels. The inventories build up seemed to weigh heavy on WTI prices with price reaching a weekly low of $84.78 a barrel, down around $10 from the weekly high.

Most Read: Crude Oil Prices Still Building Big-Picture Base

A weaker dollar following Thursday’s US Inflation Print coupled with news early Friday morning regarding China’s covid protocols saw WTI prices spike higher toward $90 a barrel. China reduced the quarantine time for travelers while scrapping a system that imposed penalties on airlines for bringing covid cases into the nations. The belief is that the move may likely spark an uptick in international travel and increase demand for oil.

TECHNICAL OUTLOOK

WTI Crude Oil Weekly Chart – November 11, 2022

Chart, histogram  Description automatically generated

Source: TradingView

The weekly chart is on course to post a bearish candlestick close for the week following two weeks of gains. It looks likely the candle will close as a hanging man pattern which usually is a sign of further downside ahead which would be at odds with the daily timeframe.

WTI Crude Oil Daily Chart – November 11, 2022

Chart  Description automatically generated

Source: TradingView

The daily timeframe has been interesting this week with a double top pattern followed by an evening star candlestick pattern. This saw price drop to lows of $84.78 before a bullish rally saw WTI print a morning star candlestick pattern, an indication of the indecisive nature at present.

The morning star candlestick pattern together with the relaxation of covid protocols should result in some upside as the new week begins. The momentum behind the bullish push from Thursday could push price to retest the double top pattern around the $93.64 area with a sustained break above needed to challenge the $100 a barrel psychological level. However, given the possible weekly candle close discussed above WTI could put in a potential triple top pattern and remain within the range between $93.64 and $84.78 for the week ahead.

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Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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