Oil Short-term Outlook: Crude Fails 80– Bears Charge Support

Oil Technical Outlook: Crude Short-term Trade Levels (WTI)

• Oil snaps back to Fibonacci support- outside-day reversal threatens trend resumption
• Bears charge for break – battle lines drawn into December-open
• WTI resistance 80.31/87, 83.24, 86.27 - Support 75.35/62, 74.03, 72.88

Crude oil prices snapped a two-day rally with WTI poised to mark a massive outside-day reversal ahead of a major resistance zone today. The focus remains on a key support zone as the bears charge for a break. These are the updated targets and invalidation levels that matter on the short-term WTI technical charts into the monthly close.

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Oil Price Chart – Crude Daily (WTI)

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

Technical Outlook: In last month’s Crude Oil Short-term Outlook we noted that, “the threat remains tilted to the downside while below the weekly open (88.17) and we’re on the lookout for an exhaustion low heading into November. The immediate focus is on possible inflection off the 82.31-83.24 support pivot…” WTI held yearly open support into the monthly open with price plunging more than 13.6% off the November highs. The decline faltered into slope support extending off the yearly lows with a consolidation breakout yesterday quickly faltering today at the 61.8% retracement of the monthly range (not depicted). Note that this also marks a third weekly attempt to breach the 200-day / 52-week moving average at 78.05/08 respectively. Threat for exhaustion / trend resumption here.  

Oil Price Chart – Crude 240min (WTI)

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

Notes: A closer look at oil price action shows WTI trading within the confines of an ascending parallel formation with the median-line highlighting the 200-DMA near the 78-handle. Key support rests with the 2022 yearly-open / 61.8% Fibonacci retracement of the yearly range at 75.35/62 and is backed closely by the weekly opening-range low (ORL) / slope support at 74.03. Ultimately, a close below the November low-day close (LDC) at 72.88 is needed to mark downtrend resumption for the bears.

Key resistance remains at 80.31/87- a region defined by the 2023 yearly-open and the 38.2% retracement of the September decline. Look for a larger reaction there IF reached with a weekly close above the April high-day close (HDC) at 83.24 needed to suggest a larger trend reversal is underway.

Bottom line: Oil has recovered off a key support pivot with a near-term consolidation breakout failing ahead of resistance today. From at trading standpoint, rallies should be limited to 80.87 IF price is heading lower with a close below 72.88 needed to fuel the next leg in trend. Stay nimble into December and watch the weekly close here. I’ll publish an updated Crude Oil Weekly Forecast once we get further clarity on the longer-term WTI technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex