Crude Oil Technical Analysis - Bullish & Bearish Scenarios to Watch
Crude Oil Technical Outlook:
- WTI crude oil stuck in channel/bear-flag, battling the 200-day MA
- Brent also bear-flagging, has 200-day/t-line above
For an intermediate-term fundamental and technical viewpoint, check out the Crude Oil Forecast.
WTI crude oil stuck in channel/bear-flag, battling the 200-day MA
WTI crude oil isn’t positioned much differently than it was a week ago, pressed up against the top of the channel and 200-day MA. It’s been a grind in oil since the beginning of October, but like all choppy periods of trading they do come to an end with a solid directional move as the result.
The period of back-and-forth is forming a channel resembles that of a bear-flag given the strong down-move prior to its development. But before the pattern can be confirmed as a bearish period of digestion, we need to see a break of the lower parallel.
In the event it does, the 50-line will quickly come into play along with the potential to see the 2016 trend-line reached, a target that has admittedly been in mind for several months. If it gets there it will have been a very long and winding road to do-so.
In the event that oil stays within the confines of the channel and can break above the 200-day, there is a chance at some point we see a pickup in buying pressure that takes the commodity up to the October 2018 trend-line, nearing the Saudi oil-spike in September.
The bottom line is that we need to be prepared for oil to make a move soon, but be patient in doing so as further confirmation is needed to clarify the picture.
WTI Crude Oil Daily Chart (bear-flag/channel, 200-day)
Brent also bear-flagging, has 200-day/t-line above
Brent is of course looking like its sibling contract, but broadly speaking it has a more bearish tilt to it with the chart over the last few months leaning lower to a slightly larger degree than WTI. Illustrating this, is the close proximity of the 2016 trend-line. To reach it wouldn’t even require a break below the lows in August and October.
As is the case with WTI, a break of the lower parallel from the October low is needed to get Brent running downhill, while a continued push is set to have price testing top-side trend thresholds. The 200-day and October 2018 trend-line like up just under 65.
Brent Crude Oil Daily Chart (bear-flag break or stay in channel?)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.