Crude Oil Technical Outlook – Unconvincing Rally, Could Soon Fail
Crude Oil Technical Highlights
- WTI crude oil is rallying, but not trustworthy
- Turn down soon may help fill out technical pattern
The WTI crude oil contract has been higher for much of the month, with its biggest up day coming on Wednesday. But this recent strength isn’t all that inspiring for higher prices because of the tendency for rallies to fail in recent months.
Oil may want to push a little higher here soon, but watch how price reacts around the nearby 200-day MA. A decline of a couple bucks from current levels, or just a little higher will have in focus the underside trend-line of a developing channel/bear-flag.
The lines are angled upward, and so as long as the lower line holds then the short-term trend, while choppy, will remain higher. A break, however, will have sizable support in the 51/50.50 in focus, an area which has put in a floor on three occasions since June.
The 2016 trend-line remains the target (~48), it has been for quite a while now. The path, though, hasn’t been clear, and getting into a position for a move down to the long-term threshold hasn’t been easy in the absence of a clear driver in oil. Perhaps that will change soon with a break of a clear lower boundary on the developing technical formation.
As far as the upside goes, even if the channel structure were to fall apart with further surging prices, the general tilt of the chart has been down for some time now. This means rallies should continue to be viewed with a wary eye until strength can prove itself.
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WTI Crude Oil Daily Chart (200-day/tech levels)
WTI Crude Oil Hourly Chart (closer look at channel/bear-flag)
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.