September 28, 2022
  • September 28, 2022

Crude Oil Technical Analysis: WTI Falling Wedge

By on August 22, 2022 0

Oil Talking Points:

  • Oil prices remain a hot issue in global markets.
  • WTI Crude Oil has spent most of the past three months falling, shaping a descending wedge. Such formations are often followed for bullish reversal potential.
  • The analysis contained in the article is based on price action and graphic formations. For more on price action or chart patterns, see our DailyFX Training section.

Crude oil continues to consolidate. I researched this two weeks ago.highlighting a few key technical elements that remain in play today.

For support – I was looking for an area of price action support this has been in play for the past decade. It’s a wide area, yes, but given price action in WTI over the past decade, it’s pretty clear that this is a key price range for oil producers. This area helped establish support as prices rose from 2011 to 2014. And then it turned into a resistance area in 2018 and again in early 2021, just before the Q4 breakout really started to break out. to hit. And even when that happened, the 85.90 level helped mark the October high and so far this month is helping mark the August 2022 low.

This level of 85.90 came into play last Tuesday, so about a week after writing the previous technical article on WTI. But, he remains in play today as a support. At the very least, it illustrates a clear example of prior price action resistance turned support.

WTI Crude Oil Monthly Price Chart

Chart prepared by James Stanley; CL1 on Tradingview

WTI Crude Oil Daily Chart

Moving down to the daily crude oil chart and a falling corner becomes prominent. It is a formation that shows between two unequal angles trend lines. Resistance remains at the more aggressive trendline, illustrating greater aggression from bears when price is at or near resistance. Support, on the other hand, shows a lower angled trendline, and this often appears when there is a major support point in the way. This major support point could make it more difficult to trigger further bearish exposure (given the involvement of support may block further decline).

Falling wedges are often followed for the purpose of bullish reversals – assuming the same lack of aggressiveness from bears at or near support – may continue to move until sellers eventually pull back , allowing a counter-movement to take hold.

WTI Crude Oil Daily Chart

with crude oil daily chart

Chart prepared by James Stanley; CL1 on Tradingview

Short Term Crude Oil

From the four-hour chart below, we can see that the bulls haven’t taken control of things yet. But, we can also see where they have so far been able to help cauterize support around the lows at this 85.90 point, and this leveled price action is already a game changer from the aggressive selling that has driven for much of the past two months.

A break above the short-term resistance at 91.24 would also break the falling wedge formation, opening the door for greater upside potential.

The next major level above is the same area around 95.00 psychological level which served as support-turned-resistance until July and early August.

Four Hour WTI Crude Oil Price Chart

with four hour chart of crude oil

Chart prepared by James Stanley; CL1 on Tradingview

— Written by James Stanley, Senior Strategist, and Head of DailyFX Training

Contact and follow James on Twitter: @JStanleyFX

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