Oil Price Outlook: Crude Surges 6% in Two Days – WTI Resistance Ahead
- Crude Oil price rally targeting first major resistance target at 58.45/61
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Crude Oil prices surged more than 6% over the past two days with WTI poised to test a key weekly resistance barrier just higher. These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.
Crude Oil Price Chart – WTI Weekly
Notes: In my previous Oil Weekly Price Outlook we noted that WTI had, “been testing this key support barrier since June and while the broader risk remains lower, the short-bias remains vulnerable while above the 51-handle.” The support zone in focus was 50.59-51.60 – a region defined by the June swing low and the 61.8% retracement of the December advance. The September low at 50.97 held into the October close with the subsequent recovery now approaching key confluence resistance.
The immediate focus is on reaction at 58.45/61- where the 61.8% retracement and the September high-week close converges on parallel resistance. A breach / close above this threshold is needed to keep the long-bias viable targeting more critical resistance at 2018 open / 61.8% retracement of the April decline at 60.06/47. Initial weekly support rests with the October reversal close at 54.78 with critical support steady at 50.59-51.60.
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Bottom line: Crude oil prices are approaching confluence downtrend resistance just higher at 58.45/61. From a trading standpoint a good place to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion on a stretch higher here. Watch the weekly close. Ultimately, the trade remains constructive while above this week’s low. I’ll publish an updated Oil Price Outlook once we get further clarity on the near-term technical trade levels.
Crude Oil Trader Sentiment – WTI Price Chart
- A summary of IG Client Sentiment shows traders are net-long crude oil - the ratio stands at +1.11 (52.71% of traders are long) – neutral reading
- Long positions are 32.28% lower than yesterday and 11.14% higher from last week
- Short positions are42.06% higher than yesterday and 21.79% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed Oil - US Crude trading bias from a sentiment standpoint.
See how shifts in Crude Oil retail positioning are impacting trend- Learn more about sentiment!
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.