Crude Oil Technical Highlights:
- WTI sharp reversal around March 24 high puts it at risk of declining
- Pullback could bring Dec ’21 trend-line into play around $104-106
WTI crude oil (CL) started the U.S. week (holiday on Monday) with a sharp move higher, putting the front month contract two cents away from $120 per barrel. The reversal lower to close the session in the red, though, suggests we will see more weakness ahead in the near-term.
The reversal in of itself was significant, but really what makes it an important event is the levels it occurred around. The March 24 high at $116.64 wasn’t maintained and yesterday’s high was just above a top-side parallel that ties in with the Dec ’21 trend-line.
This makes for an interesting set-up – sharp reversal around key levels. On that the outlook is lower for oil in the near-term, perhaps down to the trend-line from the end of 2021. This would require a decline to around the $104-106 level, depending on how long it takes to reach that point.
Given the sharp reversal and general volatility of crude oil, it shouldn’t take long to trade off hard if the downside scenario is going to play out. Shorts are appealing as long as yesterday’s high at 119.98 isn’t breached on a daily closing basis.
Existing longs from lower levels may be best served by buttoning up trailing stops. Fresh longs appear to be at significant risk here unless the aforementioned breakout above yesterday’s high can occur. Then the highs from early March at $130.50 could come into play.
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
