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Crude prices are up nearly 7.5% off the August lows with the reversal now approaching the monthly opening-range highs. Here are the updated targets and invalidation levels that matter on the Crude Oil price charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

Crude Oil Daily Price Chart (WTI)

Crude Oil Price Chart - Daily

Technical Outlook: In my previous Crude Oil Price Outlook we noted that, “Daily confluence support rests at 64.55/66 where the 61.8% retracement of the yearly range converges on the 200-day moving average and down-slope support. Broader structural support rests at the lower parallel (blue) / June lows at 63.57- We’re looking for a reaction / possible exhaustion off one of these levels.” Price registered a low at 64.40 the next day with the subsequent reversal clearing channel resistance / monthly open at 68.39constrictive.

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Crude Oil 240min Price Chart (WTI)

Crude Oil Price Chart - 240min

Notes: A closer look at crude sees price trading within the confines of an ascending slope formation with a break through and test of the monthly open resistance as support, keeping the focus higher in price. Interim support rests at 68.39 with near-term bullish invalidation now raised to the lower parallel / 2010 low at 67.14. Initial resistance targets are eyed at 69.82/89 backed by the trendline confluence around ~70.40 and a more significant Fibonacci confluence at 71.10/21.

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Bottom line: Crude has responded to key longer-term structural support and leaves the risk weighted to the topside while above 67. Ultimately a breach above the objective monthly opening-range highs would be needed to validate resumption of the broader up-trend.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Most recent Foundations Session- Seeing the Forest from the Trees

Crude Oil Trader Sentiment

Crude Oil Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long Crude Oil - the ratio stands at +1.39 (58.1% of traders are long) – weak bearishreading
  • Traders have remained net-long since July 11th; price has moved 3.5% lower since then
  • Long positions are1.4% lower than yesterday and 16.3% lower from last week
  • Short positions are 7.4% higher than yesterday and 41.2% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Crude prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Crude Oil price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Crude Oil retail positioning are impacting trend- Learn more about sentiment!

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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com