Crude Oil Price Outlook: Bears Show Teeth, Technical Break Near Confirmation
Crude Oil Highlights:
- WTI crude oil broke key threshold, set up to trade lower
- Brent crude oil could be ready to trade sub-58 soon
WTI crude oil broke key threshold, set up to trade lower
WTI crude oil broke with momentum yesterday, declining below the lower parallel of a channel rising up off the early October low. The snapping of this threshold puts oil at risk of seeing its way lower with the choppy trend structure over the past few weeks coming into serious doubt.
Taking a more conservative approach to drawing trend support, one can make the case that WTI is still sitting on its last line of support (dotted t-line). With that in mind, waiting for a little more weakness or a failure to bounce here could be a prudent move in receiving the last bit of confirmation that a move lower has kicked off.
It also helps the bear-case that the November 8 reversal day low was cleanly broken, which now makes it a near-term level of resistance (55.73). A small congestion phase between current levels and that low could break a familiar sequence.
Each time oil has dipped in recent weeks it quickly turned around, and by not doing so immediately this time it would add weight to the notion that a larger swing lower is underway. Looking lower, the only meaningful swing-low between here and just above 50, is the October 31 swing-low at 53.66.
WTI Crude Oil Daily Chart (snapping channel)
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Brent crude oil could be ready to trade sub-58 soon
Brent crude oil is of course behaving very similarly to the WTI contract, sitting on its last line of support as well. A break here could soon have the area near 58 in play, the 2016 trend-lien and lows from August and October. An immediate turnaround here will keep crude supported for now, but the choppy trend off the early October low still suggests at some point a break lower will gain traction.
Brent Crude Oil Daily Chart (sub-58 looks next)
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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.