Oil Price Forecast: Crude Oil Spills Back into Support

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

• Oil prices plunge 8.1% off post-election / November high- approaching multi-month consolidation lows
• WTI testing near-term support into monthly range lows- risk for price inflection
• Resistance 70.44/59, 71.93-72.46, 73.88/96 (key)- Support 67.48, 65.62-66.31 (key), 63.63

Crude oil prices are trading near the monthly lows with the post-election sell-off now approaching the lower bounds of a multi-week consolidation pattern. WTI has been alternating between weekly gains & losses for the past five-weeks and the although the medium-term risk remains weighted to the downside, the immediate decline may be vulnerable into key support near the yearly lows. Battle lines drawn on the weekly, daily, and 240min WTI technical charts.

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 WTI was approaching, “key technical support into the yearly lows and while the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into this confluence zone. From at trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 65.62-66.31- rallies should be limited to the yearly open IF price is heading for a break lower with a close below this key pivot zone needed to fuel the next major leg in price.”

WTI registered an intraweek low at 66.70 that week before rebounding with the US election recovery unable to mark a weekly close above the yearly open at 71.33. The pullback responded to consolidation support this week and once again, the short-side may be vulnerable here as price continues to show signs of exhaustion just ahead of this key support zone.

Oil Price Chart – WTI Daily

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

A look at the daily chart shows WTI continuing to trade within the confines of the descending pitchfork extending off the July high. Note that the 75% parallel converged on resistance into the monthly open with the rally capped by the August low-day close (LDC) / June Low at 71.93-72.46. Key resistance / bearish invalidation remains unchanged at the October high-day reversal close (HDC) / 61.8% retracement of the October decline at 73.88/96.

Oil Price Chart – WTI 240min

 

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

A closer look at oil price action shows WTI trading within the confines of an embedded ascending pitchfork with the lower parallel catching the lows for now. Initial support rests with the October LDC at 67.48 with a break below critical support at 65.62-66.31 still needed to mark downtrend resumption. Subsequent support objectives rest at the 2023 low at 63.61 and the 2020 high-week close (HWC) / 100% extension of the 2023 decline at 59.16-60.31- look for a larger reaction there IF reached.

Bottom line: The oil sell-off is approaching the lower bounds of a multi-week range with near-term price action trading into slope support today. From a trading standpoint. A good zone to reduce portions of short-exposure / lower protective stops- look for a reaction on a stretch towards key support near the 66-handle. Rallies should be limited to the monthly open at 70.51 IF price is heading for a break with a close below 65.62 needed to fuel the next major leg of the decline.

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

Follow Michael on X @MBForex