Oil Price Forecast: WTI Spills Into Support – Reversal Risk Builds

Crude Oil Technical Forecast: WTI Weekly, Daily & Intraday Trade Levels

Oil prices plunge more than 7.6% since the start of October- now testing initial support
Building momentum divergence suggesting the immediate breakdown may be losing steam
Weekly opening-range intact- breakout to dictate near-term direction
Resistance 60.15, 61.45, 62.90 (key) - Support 58.19/46, 56.83-57.20 (key), 54.36-55.10

Crude oil is trading in a near-term range at support after plunging more than 13.1% off the September high. The decline has been substantial, but fading momentum highlights a potential inflection point at these levels. The immediate focus is on a reaction from this support zone, with a breakout of the weekly opening range expected to drive the next directional move. Battle lines drawn on the weekly, daily, and 240min technical charts.

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Oil Price Chart – WTI Weekly

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

Technical Outlook: In last month’s Oil Price Forecast we noted that the, “the September opening-range is preserved just above key technical support within the July downtrend- look for the break in the weeks ahead. From a trading standpoint, rallies would need to be limited to 65.97 IF price is indeed heading lower on this stretch with a close below 61.45 needed to mark resumption of the multi-month downtrend in Oil.” WTI broke lower into the October open with price plunging more than 13.1% off the September high. The decline halted this week at the initial support, and the focus is on a reaction off this mark in the weeks ahead with the medium-term outlook still weighted to the downside while below the median-line.

Oil Price Chart – WTI Daily

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

A look at the daily chart shows WTI trading within the confines of a descending pitchfork formation extending off the late July high with price trading just above support at the April close low / weekly close low at 58.19/46. Key support rests just lower at the 100% extension of the June decline / yearly (May) low-close at 56.83-57.21. Note that the lower parallel converges on this threshold over the next few days and further highlights the technical significance of this zone. Look for a larger reaction there IF reached with a break / close below needed to fuel the next major leg of he decline towards 54.36-55.10- a region defined by the 61.8% extension of the 2022 decline, the 2016 swing high, and the 2025 swing low.

Oil Price Chart – WTI 240min

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

A closer look at oil price action shows WTI carving the weekly opening-range just above near-term support- look for a breakout in the days ahead to define the next move. Initial resistance is eyed with the weekly high at 60.15 with a breach / close above the median-line needed to suggest a larger correction is underway within the broader downtrend. Subsequent resistance objectives eyed at the yearly low-week close (LWC) at 61.45 and the monthly range high at 62.90- both levels of interest for possible top-side exhaustion / price inflection IF reached. Ultimately, a close above the upper parallel would be needed to suggest a more significant low is in place / a larger trend reversal is underway.

Bottom line: The oil breakdown is testing near-term support here with building momentum divergence suggesting the immediate decline may be vulnerable. The immediate focus is on a breakout of the weekly opening-range for guidance here. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to the median-line IF price is heading lower on this stretch with a close below 56.83 ultimately needed to mark resumption of the multi-year downtrend.

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--- Written by Michael Boutros, Sr Technical Strategist

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