Crude Oil Technical Highlights:
- Trading around macro area of resistance
- Watching price action for confirmation or rejection
- This week could be a pivotal one
Oil is in the process of testing a major level extending back a decade. A sustained breakout above 77 could have WTI rolling onto much higher levels. Given the decade-long resistance, seeing crude close above resistance on a weekly basis is the key. With that in mind, this week could be a pivotal one.
How far oil can rise beyond resistance is hard to say at this juncture, but the next roadblocks don’t arrive until between 85 and 91, minor swing levels carved out during 2013 and 2014. The next really big area of resistance doesn’t arrive until between 107 and 115, the high points of a large range (wedge) from 2011 to 2014.
That is a long way higher still, so for now the focus will be on seeing if oil can maintain above the 77-mark for any length of time. It is entirely possible that we see a rejection this week that marks a reversal in price, so we will need to be patient and flexible around this key area of resistance.
If oil rejects lower, then watch how near-term trend support from August holds up. If a rejection sends crude below trend support, then we could see it quickly fall back below 70.
For now, WTI looks like it wants to keep on rolling, but we need to be mindful of how important this area is. A sustained breakout above 77 on a weekly closing basis will be construed as a macro signal that it wants to keep on going. While a rejection lower will suggest near-term weakness at the least, possibly worse.
Crude Oil (CL1!) Weekly Chart
WTI Crude Oil Chart by TradingView
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
