- Oil pricereverses more than 13% off the monthly lows– rally targets August open
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Oil prices are attempting to snap a two-week losing streak after turning sharply from monthly support last week. The advance may have further to go but keeps price within the confines of the broader downtrend. These are the updated targets and invalidation levels that matter on the oil weekly price chart (WTI). Review my latestWeekly Strategy Webinar for an in-depth breakdown of this US Dollar trade setup and more.
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Oil Price Chart – WTI Weekly
Notes: In my last Oil PriceOutlook we noted that, “The oil price sell-off is testing support targets here at 51.03/67,” while warning to, “be on the lookout for possible downside exhaustion.” WTI briefly registered a low at 50.51 before turning sharply higher with the advance now approaching the August open at 57.89. Note that weekly momentum has continued to range into the apex of this consolidation pattern- look to the break for guidance.
Initial resistance is eye at the April trendline with key resistance steady at 60.06/47 – a breach / close above this threshold would be needed to suggest a larger breakout is underway. Initial support now rests with the low-week close at 54.23 with a break / close below the 61.8% retracement at 51.60 needed to mark resumption of the broader downtrend, targeting 48.24.
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Bottom line: Oil prices turned support last week with the recent price breakout now approaching initial resistance targets. From a trading standpoint, look to reduce long-exposure / raise protective stops on a rally towards the monthly open / trendline resistance. Ultimately, we’re treating this as a range for now- don’t chase this just yet. I’ll publish an updated Crude Oil Price Outlook once we get further clarity in near-term price action.
Crude Oil Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-long Oil - the ratio stands at +1.64 (62.1% of traders are long) – bearish reading
- Traders have remained net-long since July 12th; price has moved 3.1% lower since then
- Long positions are 18.9% lower than yesterday and 11.8% lower from last week
- Short positions are 11.4% lower than yesterday and 6.0% lower 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. Recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse higher despite the fact traders remain net-long.
Previous Weekly Technical Charts
- Canadian Dollar (USD/CAD)
- US Dollar (DXY)
- Gold (XAU/USD)
- Crude Oil (WTI)
- Aussie (AUD/USD)
- Silver (XAG/USD)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex