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Oil Price Targets: Crude Collapses after Failed Breakout– WTI Levels

Oil Price Targets: Crude Collapses after Failed Breakout– WTI Levels

2019-09-25 18:30:00
Michael Boutros, Technical Strategist
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Oil prices have remained under pressure since last week’s +15% range in price with crude pulling back below downtrend resistance, nearly paring the entire advance. The decline is now approaching monthly open support and we’re looking for a reaction in price. These are the updated targets and invalidation levels that matter on the oil weekly price chart (WTI). Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie price setup and more.

New to Forex Trading? Get started with this How to Trade Crude Oil Beginners Guide

Oil Price Chart – WTI Weekly

Oil Price Chart - WTI Weekly - Crude Trade Outlook - USOil Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Oil (WTI) on Tradingview

Notes: Crude prices posted the largest single-week range since November 2014 last week with price failing to close above a critical resistance confluence at 60.06/47 – a region defined by the 2018 yearly open and the 61.8% retracement of the late-April decline. Note that weekly momentum has continued to compress into the apex of a consolidation pattern and we’re looking for the break to offer further guidance / validation of the near-term directional bias.

Despite the recent price spike, oil continues to trade within the confines of a modified descending pitchfork formation extending off the 2018 / 2019 highs and keeps the broader outlook tilted to the downside while below the upper parallel. Initial support rests with the low-week close at 54.23 with key support steady at 51.03/60 Fibonacci confluence – look for a bigger reaction there IF reached. Subsequent support objectives at 48.24 and 44.92-45.23 (key) in the event of a break. A topside breach / close above 64.40 would ultimately be needed to shift the broader focus higher in oil prices.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: Crude oil prices failed at key confluence resistance last week and leaves the broader downtrend intact. Form a trading standpoint, looking sideways to lower for now with a break of the pending momentum consolidation to offer further guidance. We’ll favor fading strength while below the upper parallel ultimately targeting a test / break below the August low-week close.

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment - WTI Price Chart - Trade Outlook
  • A summary of IG Client Sentiment shows traders are net-long Oil - the ratio stands at +2.7 (73.0% of traders are long) – bearish reading
  • Traders have remained net-long since September 16th; price has moved 4.6% lower since then
  • The percentage of traders net-long is now its highest since August 1st
  • Long positions are 22.8% higher than yesterday and 15.9% higher from last week
  • Short positions are 19.3% lower than yesterday and 31.3% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger Oil-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in crude oil retail positioning are impacting trend- Learn more about sentiment!

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Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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