WTI Crude Oil Price Technical Forecast:
- Crude oil prices have continued last week’s support bounce up to a key area of resistance. DOE inventories data is due out later today with the potential to further push that next trend in crude oil.
- There’s a number of interesting items on the fundamental front as discussed by my colleague David Song earlier today, and this article will largely focus on the technical backdrop around WTI crude oil prices.
- DailyFX Forecasts are published on a variety of markets such as Oil, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
Which trend is the true trend? That’s a question that will plague traders for as long as they plot around charts, and its very relevant right now in crude oil as prices have volleyed from support up to resistance, begging the question as to whether the sell-off that sparked in late-April has more room to move lower, or whether the bullish trend that ran from last December into this April will come back to life. And then taking a further step back, the three-month sell-off from last October into those December lows looms large, as this, at the time, appeared to be a clear signal that something was afoot. Near-term price action isn’t very clear in regards to the longer-term theme, but this keeps the door open on either side of crude oil prices with relevant setups available for each.
WTI Crude Oil Daily Price Chart
Chart prepared by James Stanley
Coming into last month oil prices had already struck a very negative tone after a rocky month of May. WTI crude prices continued to fall from the highs above 66 that were set in late-April all the way down to the key zone of support in the 50 area. That support caught in early-June, and after a week of back-and-forth price action, buyers were finally able to make a stand to push prices-higher, eventually finding resistance at the 60-handle later in the month.
The 60-handle was finally tested through two weeks ago as fears of supply disruption populated around the development of Tropical Storm Barry. But, as written around that time, a lack of strength above this price highlighted the fact that the bullish side of Oil was coupled with supply fears; keeping the door open for bearish scenarios should prices dip back-below 60.
WTI Crude Oil Four-Hour Price Chart
Chart prepared by James Stanley
Current support in crude oil prices came in last week around the 55-level and so far, resistance has started to show around the 57.50 level that was identified in this week’s technical forecast. This can open the door for short-side plays with targets re-directed towards 55, with the level around 55.57 appearing especially attractive for nearby targets around this zone. If this zone comes into play fairly quickly, secondary target potential exists a bit-lower, around 53.27, 52.50 and then the area of the June lows from 50.54-51.48.
On the long side, traders can look for a hold of support around the 56.02-56.28 zone. This area was previously looked at for resistance potential in this week’s technical forecast, but price action has since jumped-above and cauterized support around this zone. For topside strategies, a hold of support in this area keeps the door open for stops below the July low and initial targets around that same 57.50 area on the chart.
WTI Crude Oil Hourly Price Chart
Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Oil or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
