Crude Oil Technical Forecast: WTI Weekly Trade Levels
- Oil prices reverse sharply off uptrend resistance- poised to break June rally
- Crude testing key pivot zone- threat for deeper correction while below October open
- WTI Resistance 90.79, 93.88, 96.52- Support 82.48-83.28, 80.31, 78.68
Oil prices are in freefall with crude spilling more than 13.3% off the yearly highs to erasing the entire September rally. A reversal off uptrend resistance is now challenging a larger break and the battle lines are drawn heading into the close of the week / start of Q4. These are the updated targets and invalidation levels that matter on the WTI weekly technical chart.
Crude Oil Price Chart – WTI Weekly
Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView
Technical Outlook: In last month’s Crude Oil Price Forecast we noted that, “A three-week rally of nearly 17.5% now takes price into uptrend resistance at the upper bounds of the ascending July channel. The immediate upside may be limited here near-term, but the focus remains weighted to the topside while within this formation.” WTI registered an intraweek high two-weeks later at 95.01 before reversing sharply lower with oil plunging through channel support yesterday. The move marks the largest weekly range since May and IF oil closes at or below these levels, would represent the largest weekly decline since March (which essentially established the lows of the year). The immediate risk is lower but we’re on the lookout for downside exhaustion into Q4.
The decline takes price into a major technical confluence today at 82.84-83.24 – a region defined by the August high-day close, the 38.2% Fibonacci retracement of the yearly range, and the April high-day close. A break / close below this key threshold would threaten a deeper correction towards the objective 2023 yearly open at 80.31 and the 52-week moving average at 78.68. Ultimately, losses would need to be limited to the 61.8% retracement at 75.62 for the broader May advance to remain viable (bullish invalidation).
Initial weekly resistance is eyed at the monthly-open / yearly high-week close at 90.79 backed closely by 93.87. A breach / weekly close above the 50% retracement at 96.52 would eventually be needed to validate a breakout of the broader 2022 downtrend.
Bottom line: The oil price collapse is testing a major level here into the start of the month / quarter- looking for a reaction. From at trading standpoint, the threat remains for a deeper correction while below 90.79- IF price breaks lower here, the focus will be on an exhaustion low ahead of 75.62 with a close above 96.52 ultimately needed to fuel the next leg in oil. Stay nimble here and watch the weekly closes. I’ll publish an updated Crude Oil Short-term Outlook once we get further clarity on the near-term WTI technical trade levels.
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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com
Follow Michael on Twitter @MBForex