Crude Oil Weekly Technical Forecast: Support May Soon Lead to Rally
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Crude Oil Technical Highlights:
- WTI crude oil may sell down a bit more, but…
- Watch how price reacts to nearby support
- General trading bias is down, then higher
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Crude oil may sell off a bit more before finding buyers
Heading into last week crude oil was set up to head lower with the weekly reversal candle off the underside slope in place from the 2016 low. Further adding to a negative trading bias was the Tuesday daily reversal, which created the ‘reversal inside a reversal’ set-up discussed in Wednesday’s webinar.
Oil may initially see some more selling to begin the week as both the 200-day and slope from earlier this year get tested a bit more thoroughly. This leaves the downside open to a move to around the 60-mark, but from there a low could form.
Watching price action at technical levels is always a major key to understanding their importance, and with that if we see some sort of rejection at support that suggests momentum wants to turn back up, then the trading bias will flip towards higher prices.
Bigger picture, though, with the weekly rejection around the 2016 slope still standing firm it is unclear yet whether any rally from here will be sustainable beyond the 66 area. Given the generally one-way trend from the December low until just recently, crude may be in for a period of back-and-forth trading, favoring short-term flips of levels.
Check out the IG Client Sentiment page to find out how changes in positioning in major markets could signal the next price move.
Crude Oil Daily Chart (Watch price action at support)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.