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Crude Oil Price Forecast: Muted Price Action Setting WTI Up for a Move

Crude Oil Price Forecast: Muted Price Action Setting WTI Up for a Move

Paul Robinson, Strategist

Crude Oil Technical Highlights:

  • WTI muted price action is carving out levels to watch for a breakout
  • Broader trend is higher, but can’t rule out a breakdown

WTI crude oil has been settling down ever since the couple of weeks following Russia’s invasion of Ukraine, which is continuing to lead to range trading conditions. But this won’t last forever as the market will ultimately pick a direction to attempt to trade in.

The sideways price action is creating levels to watch, and with a little more time the price could become even more congested and lead to a better set-up. Which way we see a break occur is still up in the air of course, but if the broader trend dictates then we are likely to see an eventual upside breakout.

The trend-line from December is becoming increasingly stronger as it has a total of four connecting points now, with the most recent jab lower validating the line on April 25. The rising trend-line coupled with the high on April 18 at 109.20 could make for an ascending wedge should oil fail to rise above in the near-term. It’s only a scenario, but one worth watching as this type of pattern would likely make the breakout more decisive when it happens.

Crossing the 109.20 threshold on a daily closing basis is seen as getting oil moving back in the direction of the trend, with the next resistance level clocking in at 116.64. Beyond there we would be looking at the March spike-high at 130.50.

If WTI fails to trade higher and breaks the December trend-line, then watch how the April 25 low at 95.28 is handled. Just below there is a more meaningful low to watch, however, and that is at 92.93. A breakdown below that point would have oil heading towards the October high at 85.41 and the rising 200-day moving average currently at 83.62 and rising.

Crude Oil (CL1!) Daily Chart

crude oil 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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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