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WTI Crude Oil Price Forecast: Can $43 Level Hold Bears Away?

WTI Crude Oil Price Forecast: Can $43 Level Hold Bears Away?

Tyler Yell, CMT, Currency Strategist


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Talking Points:

  • Crude Oil Technical Strategy: Sitting On Price Support, Make Or Break Toward Year End
  • 2-Month Support On WTI / Crude Oil Coming Into Pressure
  • Late October Morning Star Pattern Can Provide Technical Guidance On Next Large Move

Strength in the US Dollar has left no market safe, especially commodities. Copper, often cited as a leading indicator because of its usefulness in new construction projects, continues to fall, and many commodities are following suit. The prospect for higher rates from the Federal Reserve would predictably make money for new projects more expensive to come by and thereby, drop the present demand. However, the Saudi Oil Minister Ali al-Naimi believe the 4-day slide is likely not a sign of what’s to come as Oil demand could soon reflect “attractiveness” due to currently price level of crude prices. However, he noted the expectation that China will be a large driver of the demand, which is telling that global demand doesn’t appear present.

Currently, focus on the $43 - $42 /bbl price floor could be seen as long-term support. A failure to hold above that level, which included the daily range of the March 18th low could send us back toward the lows seen near the end of August. A further respect of this $46 - $42 /bbl zone could cause the late August move to $37 to be seen as a false break preceding an aggressive move higher. Trendline support also aligns with the weekly S1 level that often acts as support in a budding uptrend. A break below 42.57, the late October low, would likely quiet Bulls for some time.

A strong dollar is said to bring about the ‘pain trade’. The ‘pain trade’ would also bring Oil down rather aggressively as well. As mentioned on the analysis of the US Dollar. There is very little reason to bet against such a strong US Dollar with present evidence. A downside Fibonacci extension target of the August to October range in Oil would turn focus to 34-32.50 per barrel, the 1.272% & 1.382% Fibonacci extension respectively. T.Y.

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A break below the March 18th Range, Could Bring a Test to the Channel Lows

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