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Oil Price Outlook: Crude Range Holds Key Support– WTI Breakout Levels

Oil Price Outlook: Crude Range Holds Key Support– WTI Breakout Levels

2019-10-20 01:00:00
Michael Boutros, Technical Strategist
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Crude Oil prices are down more than 1.5% this week with WTI trading just above a critical support zone we’ve been tracking for more-than three months now. These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.

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Crude Oil Price Chart – Crude Weekly

Weekly Crude Oil Price Chart

Chart Prepared by Michael Boutros, Technical Strategist; Crude Oil (WTI) on Tradingview

Notes:In my previous Oil Price Outlook we noted that WTI was, “approaching a multi-month support zone and leaves the immediate short-bias at risk while above the 51-handle.” Price registered a low into key support at 51.00/60 before rebounding with oil continuing to consolidate within the October opening-range. Note that weekly RSI has broken below a multi-month support trigger with no break in price to validate the momentum shift – risk for some sideways action here for now.

Initial resistance is eyed at 56.07 (reversal-week close) with broader bearish invalidation at the September high-week close / 61.8% retracement at 58.45/61. A break lower from here exposes critical support at 47.34-48.24 where the 100% extension of the decline off the yearly highs and the yearly low-week close converges on longer-term trendline- look for a stronger reaction there IF reached.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line:Oil prices have 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. From a trading standpoint, looking for topside exhaustion on recoveries ahead of 56.07IF price is indeed heading lower with a downside break targeting subsequent support objectives closer to longer-term uptrend support.

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment Chart
  • A summary of IG Client Sentiment shows traders are net-long crude oil - the ratio stands at +2.95 (74.71% of traders are long) – bearish reading
  • Long positions are 8.23% lower than yesterday and 5.11% lower from last week
  • Short positions are32.46% higher than yesterday and 9.42% higher 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. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Crude Oil retail positioning are impacting trend- Learn more about sentiment!

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Previous Weekly Technical Charts

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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.

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