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Crude Oil Price Forecast: WTI Starting to Set up for a Rally

Crude Oil Price Forecast: WTI Starting to Set up for a Rally

Paul Robinson,
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Crude Oil Technical Highlights:

  • WTI tested and so far holding a sizable area of support
  • Attempting to break free from a downward channel
  • Could see a sizable rally develop in the days/weeks ahead
Oil Forecast
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A couple of weeks ago WTI crude oil (CL) traded below support created just below 93 a few months back, but rejected lower levels in a bullish manner by posting not only a reversal day but weekly candle as well. Yesterday’s turn higher from around support suggests a successful retest may be in.

WTI is currently trying to rise out of a downward channel dating to early June. Getting separation from the channel will reinforce the test of support. If we see this take place then we could see oil rally significantly in the days/weeks ahead.

Despite coming out of the channel the first hurdle that needs to be crossed to break the downward trend is the recent swing-high at 100.95. From there we could see oil rally to the 112 to 118 area before running into resistance. It may not be a rip-roaring rally, but a solid tradable variation that provides opportunities for would-be longs.

On the flip-side, should we see oil fail to hold up and break support, then the next level to watch will be the 200-day moving average. At that juncture oil may find a low, but it will be below major price support and thus won’t be viewed as bullishly as it is now.

All-in-all, the combination of big support, channel break, and potential for a higher-high over 100.95 makes oil an interesting market to keep high on the radar right now. We aren’t quite there yet, however, so it may be prudent to wait for all the pieces to line up before having a strong bullish trading bias.

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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.