Crude Oil Weekly Forecast: Downtrend Prevails Despite Best Week Since June 2020
Crude Oil Weekly Technical Forecast: Slightly Bearish
- WTI crude oil prices saw best week since June 2020
- Prices seem tilted lower within a Descending Channel
- Will the 200-day SMA challenge the key downtrend?
WTI 4-Hour Chart
WTI crude oil prices soared, gaining over 11% in the best week since June 2020. Still, the commodity remains in a broader downtrend since prices topped in July. Moreover, oil has been trending lower within the boundaries of a Descending Channel, closely observed on the 4-hour chart below. WTI bounced off the floor of the channel as well as the 61.54 – 62.90 support zone this past week.
In the near term, the 50-period Simple Moving Average (SMA) may climb above the longer-term 200-period line. This would create a bullish ‘Golden Cross’ that may offer an upside technical bias. Such an outcome may see prices climb to the ceiling of the channel, where the downtrend since July would be tested. To get a better idea of the broader outlook for the commodity, let us take a look at the daily chart.
WTI Daily Chart
WTI crude oil prices arguably remain tilted to the downside as prices follow the boundaries of a Descending Channel after confirming a break under rising support from November. Now, the 200-day SMA is coming into focus. This line could reinstate the dominant focus to the upside in the event prices continue consolidating lower within the channel.
Otherwise, a breakout under the channel exposes the March low at 57.27. Confirming a close under this price could signal that a broader reversal is in motion, threatening to overturn the uptrend that prevailed from November 2020 until early July 2021. Otherwise, breaking above the channel exposes the late July peak at 74.19 before placing the focus on the current 2021 high at 76.95.
--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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