Crude oil rally at risk as WTI stalls resistance
Crude Oil Technical Forecasts: Weekly WTI Trade Levels
Oil prices have jumped more than 17% from March lows, with a three-week rally now putting pressure on technical resistance near annual highs. Despite a barrage of headlines regarding the Colonial pipeline hacking, gas supply chain disruptions and increasing inflationary concerns, WTI remained capped by a key technical resistance area that we have been tracking for months. While the overall outlook remains constructive, the immediate advance may be vulnerable as long as it is below this threshold and we are looking for a possible price inflection in the days ahead to provide guidance. It is the updated goals and invalidation levels that rely on the oil price weekly chart. See again my last Strategy webinar for an in-depth analysis of this technical crude oil price configuration and more.
Crude Oil Price Chart – Weekly WTI
Graphic prepared by Michael boutros, Technical strategist; Crude Oil (WTI) on Tradingview
Notes: Oil prices are testing key resistance here at 65.92-66.26 – a region defined by the August 2018 low week closure (LWC) and the 2021 high closure (HC). This threshold capped the last four attempts and continues to pose a risk to the immediate advance. Open every month Support rests at 63.45 supported by key / wider support bullish invalidation at the close of the 2020 high week reversal at 59.16– look for a low ahead of this level IF the price is indeed heading higher. A breach / closure of the upper part above this critical area exposes the next upper part resistance goals at the highest point of the year 67.94, the reversal of October 2018 ends at 71.45 and the lowest from 2011/2012 to 74.26 / 94 – an area of interest for possible exhaustion of the upper face IF reached.
At the end of the line: The rally in crude oil could be vulnerable in the coming days as the price moves towards multi-year technical resistance. From a business perspective, a good area to reduce long exposure / increase protection stops – be on the lookout for possible higher exhaustion below 66.26. Ultimately, a pullback may offer more favorable opportunities closer to the uptrend support with a breakout of the highs paving the way for the next step higher towards 71.45 and beyond. Review my last Crude Oil Price Outlook for a more in-depth look at near-term WTI technical trading levels.
For a full description of Michael’s trading strategy, see his Fundamentals of Technical Analysis Series on Bbuilding a Tradiant Sstrategy
Crude Oil Traders Sentiment – WTI Price Chart
- A summary of IG customer sentiment shows traders are crude oil net-short – the ratio is -1.24 (44.56% of traders are long) – usually weak bullish reading
- Long positions are 13.68% less than yesterday and 25.98% less than last week
- Short positions are13.87% more than yesterday and 33.48% more than last week
- We generally take a vexing view of crowd sentiment, and the fact that traders are net-short suggests that US oil and crude prices may continue to rise. Traders are even shorter net than yesterday and last week, and the combination of current sentiment and recent changes gives us a bullish contrarian trading bias on crude oil. feeling point of view.
Previous weekly technical charts
— Written by Michael boutros, Technical strategist with DailyFX
To pursue Michael on Twitter @MBForex