Crude Oil Technical Highlights:
- WTI working on holding the March low
- A bounce from here may help form out a descending wedge
- Outlook is neutral to bullish as long as low holds
Yesterday, WTI crude oil took out the March low fractionally before reversing higher to close above the low of 93.53. The low, given the test and daily closing hold yesterday, makes support even more important. Today we are seeing some follow through that could lead to a meaningful recovery.
Maintaining support will be key to the outlook moving forward. It appears there is a high likelihood we see a bounce back over 100 in the near-term, but where we go from there will be interesting should it happen. A descending wedge will be in the works at that juncture.
Right now, there is no wedge to speak of, but should it come to pass, then the coiling up of price action following the fireworks to 130 will likely lead to another powerful move. Descending wedges tend to hold a bearish tilt, but need to be taken into context.
The lower highs and flat bottom indicate a market that is losing its ability to hold a rally at increasingly faster rates. This often times leads to the flat bottom support getting taken out. But the overall trend in oil is higher, so we could see a top-side breach. Have to play wedges/triangles as they unfold.
For now, there is resistance around the March 29 low at 98.44. The past few days oil has found it difficult to rise above, so if the rally is to extend higher off the larger support level, then it will need to clear that level. Above there the trend-line off the March high will come into play.
To get a solid-looking wedge the trend-line will need to be taken out with price advancing to around the 104/108 area. If we don’t see price rise from here and the March low gets clipped on a daily closing basis we may see oil decline towards the 2021 high at 85.41.
Crude Oil (CL1!) Daily 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
