Crude oil price forecast: WTI spills into trend support

Crude Oil technical forecast: WTI weekly trade levels

• Crude price breakout of multi-month consolidation takes price into downtrend support
• Risk for near-term exhaustion within the broader downtrend
• WTI resistance 71.47, 75.50s, 83.28 - support 65.92-66.57 (key), 59.16, 49.44

Crude oil prices plummeted more than 22% off the January highs with WTI now testing a key pivot zone at downtrend support. The battle lines are drawn heading into the FOMC rate decision this week. These are the updated targets and invalidation levels that matter on the WTI weekly technical chart.

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Crude Oil Price Chart – WTI Weekly

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

Technical Outlook: In our last Crude Oil price forecast we noted that WTI was poised for a breakout of a massive multi-month consolidation pattern, “with a break / weekly close below the 2022 low-week close at 71.47 needed to mark resumption of the broader downtrend towards the August 2018 low-week close / 2019 high at 65.92-66.57 and the lower parallel / 2020 high-week close at 59.16.” Oil plunged more than 20% off the monthly highs last week with the decline registering an intraday low today at 64.10- watch the weekly close.

A break below the lower parallel (blue) would keep the focus on subsequent support objectives 59.16, the 61.8% Fibonacci retracement of the 2020 (zero-rally) at 49.43 and the 2017 low / low-close at 42/43- and area of interest for possible downside exhaustion / price inflection IF reached.

Initial weekly resistance now eyed at the 2022 channel line (currently ~75.50s) with broader bearish invalidation lowered to the median-line / 2021 high-week close at 83.28.

Bottom line: Oil prices have plummeted into downtrend support and we're looking for a reaction down here- watch the weekly close for guidance. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops – rallies should be limited to the last-week’s highs IF price is indeed heading lower here. Use caution- a break below this slope could fuel another accelerated sell-off. 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