Crude Oil Technical Outlook: Short-term Bias Still Bullish, Big Level Ahead
Oil Technical Outlook
- Crude oil broke out of a downward channel sequence
- Shorter-term upward channel keeps price pointed higher
- Another hurdle to cross lies just ahead, but could see summer highs again
Crude Oil Technical Outlook: Looking for New Cycle Highs
WTI crude oil was trading inside a channel that started off the July high, but snapped the sequence earlier in the month. It was an outcome discussed as likely to occur not long ago, but with it now an actuality higher levels appear to be on the horizon.
The July 30 swing-high at 74.23 is next up as a meaningful level of resistance. It marked a sharp turn down that could present itself as a minor level of resistance. Looking beyond that point, the next major level doesn’t arrive until the current cycle high at 76.98 created on July 6.
That would certainly be a point of long-term interest and may present some problems for a further advance. The level has more history to it than just this year, as it began as resistance back in 2011/12, and then again in 2018 when oil topped and eventually declined for the next year-and-a-half.
There is still some work to be done to get to the cycle high, but so far the near-term trend is supportive of the notion that a test of higher levels is coming.
What would hurt the technical outlook in the near-term, is if the developing channel since the end of August were to snap and WTI declines below 69.39. This would tip the chart towards the downside at least in the interim, and possibly longer.
For now, cautiously running with a bullish bias unless the aforementioned takes shape. We will want to closely watch how price behaves should top-side levels come into play – sharp turnabouts would be warning signs for longs, while sustained momentum would be reason to maintain a bullish outlook.
Crude Oil (CL1!) Daily Chart
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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.