Never miss a story from Paul Robinson

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Paul Robinson

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Crude Oil Price Highlights:

  • WTI crude oil trading at 2016 t-line, lower-high could be near
  • Brent oil trading at underside of multi-month channel
  • Short-term price structures to pay attention to

To see what fundamental drivers are expected to drive oil through the remainder of the quarter, check out the Q2 Crude Oil Forecast.

WTI crude oil trading at 2016 t-line, lower-high could be near

The WTI crude oil contract is getting a lift off confluent support after looking like it might have been dead in the water. This has kept the upside in play, but a broader bullish outlook could quickly come back under fire if we see a meaningful turn lower from around current levels.

The Feb 2016 trend-line is just above the overnight high. A turn down from there will immediately have support in focus, but even as such price action will certainly increase the probability that recent strength will result in a lower-high relative to the peak carved out in April.

To validate this scenario the channel line from January will need to be broken along with the 200-day and the powerful reversal-day low on May 6 at 59.98. Looking a little deeper, on the hourly chart a channel is developing with a clear set of boundaries thus far.

This pattern, with a little more time, developing between resistance and support could offer traders even greater clarity as to how to play oil. A breakout of a well-defined range could offer a decisive trading bias, with the downside likely holding more power given the strong level of support that will have to be breached in order to get oil rolling downhill.

WTI Crude Oil Price Chart (underside of 2016 t-line)

Crude Oil Price May Be Carving Out a Top

WTI Crude Oil Hourly Chart (channel forming)

Crude Oil Price May Be Carving Out a Top

Brent contract may be more vulnerable should weakness set in

The Brent contract is postured a little bit differently with its notable resistance level arriving at the underside of the same channel that WTI is still using as support. It has seen one powerful rejection of this line, occurring last Monday.

The technical structure on the short-term chart also has a bit of a variation too when compared WTI. Brent is taking on more of the shape of a rising corrective-looking wedge. This implies the sea-saw price action of late will lead to a down-move soon.

A solid downside break of the pattern will quickly have pressure brought on the 69.23 low from May 6 and the 200-day that lies only about 10 cents beyond there. A break of both of these thresholds should usher in another round of selling. No downside break, then look for neutral to higher prices, but from where I sit it won’t hold as much appeal for a long.

Brent Crude Oil Daily Chart (underside of January-May channel)

Crude Oil Price May Be Carving Out a Top

Brent Crude Oil 4-hr Chart (corrective-looking wedge)

Crude Oil Price May Be Carving Out a Top

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX