CRUDE OIL PRICE OUTLOOK 3Q-2020: CHARTS TO WATCH AMID SECOND WAVE RISK
- Crude oil technical outlook is downgraded to neutral headed into the second half of the year with a broader bearish downtrend undermining last quarter’s rally
- Oil prices have climbed about $75.00 since the front-month futures contract imploded to a record -$40.00 per barrel this past April
- WTI crude oil price action might face headwinds in 3Q-2020 as the coronavirus pandemic lingers and continues to catalyze market volatility
Crude oil price technical outlook has downshifted to neutral for 3Q-2020. A less-optimistic forecast follows the commodity’s stalling upward trajectory after staging an impressive rebound out of negative territory earlier this year.
CRUDE OIL PRICE CHART: DAILY TIME FRAME (DEC 2019 – JUN 2020)
Chart created by @RichDvorakFX with TradingView
WTI crude oil prices have started to waver with the commodity struggling to overcome the $40.00-handle. This zone of technical resistance stands out as a clear obstacle underpinned approximately by the early-March gap lower, the 78.6% Fibonacci retracement of the year-to-date trading range, and the 200-day moving average as well.
In the event that crude oil selling pressure accelerates in 3Q-2020, however, the positively sloped 50-day moving average perched slightly above the $25.00 price level might provide a degree of buoyancy. Oil price bears could make a hearty push toward technical support if there is a breakdown of its rising channel.
That said, there is strong potential for the ebb and flow of market sentiment to strongarm the direction of oil prices. Correspondingly, it is possible that WTI crude oil price action might mirror the direction of expected stock market volatility gauged by the S&P 500 VIX.
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
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