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Oil Price Outlook: Crude Breakout Eyes August Highs- WTI Technicals

Oil Price Outlook: Crude Breakout Eyes August Highs- WTI Technicals

Michael Boutros, Strategist

Crude Oil Technical Forecast: WTI Near-term Trade Levels

  • Crude Oil updated technical trade levels – Daily & Intraday Charts
  • WTI breakout approaching initial resistance objectives / constructive while above 68.49
  • New to Oil Trading? Get started with this Free How to Trade Oil-Beginners Guide
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Oil prices are attempting to mark a fourth-consecutive weekly advance with a rally of more than 18% off the lows marking a breakout of multi-month downtrend resistance. The advance is approaching initial resistance objectives and we’re looking for possible inflection just higher in the days ahead. These are the updated targets and invalidation levels that matter on the oil price technical charts. Review my latest Strategy Webinar for an in-depth breakdown of this crude oil price setup and more.

Crude Oil Price Chart – WTI Daily

Crude Oil Price Chart - WTI Daily - USOil Trade Outlook - CL Technical Forecast

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

Technical Outlook: Crude prices have rallied 6.5% in September with the breakout rallying into initial resistance yesterday at the 61.8% Fibonacci extension of the August advance at 73.04. A breach above the July trendline keeps the outlook weighted to the topside while above the objective September open / 38.2% retracement at 68.49/76 with the next major resistance pivot eyed at the 2018 high-week close / 2011 low at 74.26/91- look for a larger reaction there IF reached.

Crude Oil Price Chart – WTI 120min

Crude Oil Price Chart - WTI 120min - USOil Trade Outlook - CL Technical Forecast

Notes: A closer look at Crude price action shows WTI trading within the confines of an embedded channel formation extending off last week’s low with price checking support today in US trade. Initial support rests at 71.13 backed by 70.43- both areas of interest for possible downside exhaustion IF reached. A breach above the May 2018 high / 61.8% extension exposes subsequent resistance objectives at 74.26-74.91 backed by the 100% extension at 76.42.

Bottom line: The crude oil breakout is testing initial resistance targets and keeps the focus weighted to the topside while above the monthly open. From a trading standpoint, look for downside exhaustion ahead of 70.42 IF price is heading higher on this stretch- ultimately the focus is on a breach /close above 74.91 to keep the long-bias viable towards the upper parallels. Review my latest Crude Oil Weekly Price Outlook for a closer look at the longer-term technical trading levels.

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

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment - WTI Price Chart - USOil Retail Positioning - CL Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short crude oil - the ratio stands at -1.32 (43.11% of traders are long) – typically bearish reading
  • Long positions are 12.97% lower than yesterday and 12.91% lower from last week
  • Short positions are14.71% higher than yesterday and 24.96% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil - US Crude prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger Oil - US Crude-bullish contrarian trading bias from a sentiment standpoint.

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Active Technical Setups

--- Written by Michael Boutros, Technical 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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