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Oil - US Crude
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of clients are net short.
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Crude Oil Technical Outlook: WTI Spills into Last Lines of Support

Crude Oil Technical Outlook: WTI Spills into Last Lines of Support

Michael Boutros, Strategist

Crude Oil Technical Forecast: WTI Near-term Trade Levels

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Crude oil prices plunged to the lowest levels in four-months today with WTI plummeting more than 26% off the June highs. The decline is now approaching technical support and the threat rises for near-term exhaustion / price inflection the days ahead. These are the updated targets and invalidation levels that matter on the oil price technical charts. Review my latest Strategy Webinar for an in-depth breakdown of this crude oil price technical setup and more.

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Crude Oil Price Chart – WTI Daily

Crude Oil Price Chart - WTI Daily - USOil Short-term Trade Outlook - CL Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; Crude Oil (WTI) on Tradingview

Technical Outlook: Crude oil is attempting to break below the 200-day moving average today with price probing the median-line of the 2020 / 2021 uptrend- the focus is on the daily close with respect to this slope. Daily momentum divergence suggest the immediate decline may be stretched here and while the threat of a near-term recovery rises, the broader medium-term risk remains tilted to the downside while below the objective monthly open at 105.99. Critical support rests at 85.61-88.01 – a region defined by the 2013 low, the 100% extension of the yearly decline and the 61.8% Fibonacci retracement of the December rally. We’re on the lookout for a possible exhaustion low / price inflection into this threshold in the days ahead.

Crude Oil Price Chart - WTI 240min

Crude Oil Price Chart - WTI 240min - USOil Short-term Trade Outlook - CL Technical Forecast

Notes: A closer look at oil price action shows WTI trading within the confines of an embedded descending channel with price rebounding today off the 100% extension of the June decline at 91.78. Initial resistance now stands with the median-line and is backed by the June lows at 101.52 and the weekly / monthly open at 104.78-105.99. A break lower from here looks to challenge key support at 85.60-88.01 – look for a larger reaction in price there IF reached. Note that a break below this threshold could fuel another bout of accelerated losses for oil with such a scenario exposing the 2021 high-day close at 83.69 and the 2018 high / 2012 low at 76.87-77.26.

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Bottom line: The crude oil price plunge is now approaching key areas of support –we’re on the lookout for possible price inflection just lower. From a trading standpoint, rallies / recoveries should be capped by the monthly open - look to reduce short-exposure / lower protective stops on stretch towards 85.60-88.01 IF reached. Review my latest Crude Oil Weekly Price Forecast for a closer look at the long-term WTI technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment - WTI Price Chart - USOil Trader Postioning - CL Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long crude oil - the ratio stands at +1.94 (65.96% of traders are long) – typically bearishreading
  • Long positions are3.07% lower than yesterday and 13.18% higher from last week
  • Short positions are6.85% higher than yesterday and 23.67% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests WTI prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed crude oil trading bias from a sentiment standpoint.
Oil - US Crude Bullish
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% 3% 1%
Weekly -22% 87% -2%
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--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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