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Crude Oil Technical Outlook Growing Increasingly Precarious

Crude Oil Technical Outlook Growing Increasingly Precarious

2019-08-05 11:00:00
Paul Robinson, Currency Strategist
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Crude Oil Price Highlights:

  • WTI crude oil at the trend-line off the December low
  • Brent crude broke December trend-line, breakdown nearing

Check out the intermediate-term fundamental and technical outlook in the Q3 Crude Oil Forecast.

WTI crude oil at the trend-line off the December low

The US crude oil contract took a hit last week as risk sentiment soured; this has in focus an important trend-line from the December low. While oil and stocks have diverged a bit in recent months from how tightly they were tracking one another at the end of last year into the beginning of 2019, they still find themselves at the same slope of support off the same December low.

This could make today an important one, at least in the very near-term. A hold of the t-line here in both the S&P 500 and oil could induce a bounce. Now whether the bounce can hold or not in either asset is to yet be seen. The S&P could hold and oil with as weak as it has been may only use trend support as temporary stopping point before trading to lower prices.

A solid bounce of the December trend-line keeps the prospects of a wedge still in play, with price action having been coiling for several months. Later on, this could prove to be an explosive resolution upon breaking out either below the Dec t-line or above the Oct t-line.

In the event of a breakdown below trend support, the June low around 51/50.50 will be eyed as the next level of support. If there is some encouraging signs for oil at the moment, it is that global stock markets are taking a sizable hit today on heightened Trade War tensions and oil is not reacting in similar fashion. For now, generally in a holding pattern until the picture clears up a bit.

WTI Crude Oil Daily Chart (December t-line)

Crude Oil Technical Outlook Growing Increasingly Precarious

WTI Oil Chart by Tradingview

Brent crude broke December trend-line, breakdown nearing

The Brent contract is trading below the December trend-line which puts it in a more precarious position than its U.S. counterpart. A firm drop through the June low (we’ll call it 60) should have the U.K. contract rolling towards a pair of trend-lines running over from 2016.

Brent Crude Oil Daily Chart (could be seeing mid to lower-50s soon)

Crude Oil Technical Outlook Growing Increasingly Precarious

Brent Crude Oil Chart by Tradingview

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---Written by Paul Robinson, Market Analyst

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