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Crude Oil Price Outlook: Bears Show Teeth, Technical Break Near Confirmation

Crude Oil Price Outlook: Bears Show Teeth, Technical Break Near Confirmation

2019-11-20 12:00:00
Paul Robinson, Currency Strategist
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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)

Crude Oil Price Outlook: Bears Show Teeth, Technical Break Near Confirmation

WTI Crude Oil Chart by TradingView

Trading Forecasts and Educational Guides for traders of all experience levels can be found on the DailyFX Trading Guides page.

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)

Crude Oil Price Outlook: Bears Show Teeth, Technical Break Near Confirmation

Brent Crude Oil Chart by TradingView

***Updates will be provided on the above ideas as well as others in the trading/technical outlook webinars held at 1030 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

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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.

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