WTI Crude Oil Technical Forecast: Bullish
- Crude oil prices came into the week with a bull pennant and buyers took care of the matter in short order, helped along by the FOMC rate decision on Wednesday.
- Oil prices are now testing a critical zone of resistance that’s shown rejections and false breakouts for each of the past three years. Why might this iteration be different? Read more below.
It was another strong week for Oil prices, with WTI pushing up for a re-test of a key zone of resistance. Demand continues to do most of the driving but, as we’ve been looking at over the past month, the technical backdrop has become a hindrance to bulls as a zone of Fibonacci levels have come into play to help hold the highs.
Starting off with the short-term…
This week saw a strong bullish trend develop after buyers stepped-in for another hold of support above the $60 psychological level. That psych level is a big price in the current juxtaposition behind crude at the moment, as it helped to produce some tumultuous price action from mid-March into mid-April. But that near-term trend has taken-over with buyers taking another shot at the 64.31-67.19 zone.
WTI Crude Oil (CL2 – Next Contract in Front) Four-Hour Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
Earlier this week, ahead of the massive onslaught of event risk, I had highlighted a brewing bull pennant in oil prices. Well, helped along by FOMC, buyers were able to pose a topside breach of that pennant. The resistance area from that formation has even come into play during late-Friday trade to help hold support, highlighting bullish continuation potential for next week with one major obstacle ahead, which we’ll look at a little later.
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WTI Crude Oil (CL2 – Next Contract in Front) Four-Hour Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
Now about that roadblock sitting ahead…
This is a big zone marked by two longer-term Fibonacci levels, and this zone has held the highs for the past three years, with inflections in 2019, 2020 and again in 2021. Buyers ran into a brick wall back in early-March but the impending pullback was caught on a trendline projection. But, technically, given the hold of support here, there may be an opening avenue to plot for continued bullish breakouts. We’ll dig deeper into the trendline below.
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WTI Crude Oil (CL2 – Next Contract in Front) Weekly Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
Ok for the final chart, I’m going to look at why I think this zone might break. The monthly chart below looks at the trendline originating off of the 2008 highs, connecting to highs in 2014 and 2018. But, more importantly for current events, this trendline was breached a couple of months ago and buyers were able to continue all the way up to that fresh two-year-high; although they eventually got caught by the big zone of resistance.
The corresponding pullback, however, saw a number of support inflections off of the trendline projection, which allowed the bull pennant to build. This keeps the door open for bullish continuation in oil prices with an eye on fresh two-year-highs.
WTI Crude Oil (CL2 – Next Contract in Front) Monthly Price Chart
Chart prepared by James Stanley; CL2 on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
