Crude Oil Short-term Outlook: Oil Rally Reignites

Crude Oil Technical Outlook: WTI Short-term Trade Levels

• Oil rally underway- weekly opening-range break marks resumption
• Crude approaching confluent uptrend resistance- risk for topside exhaustion
• WTI resistance 93.61, 95.78-96.52, 98.18- Support 88.76, 85.61 (key), 82.84-83.24

Crude oil prices surged again this week with an opening-range breakout fueling a rally back towards resistance at the yearly highs. While the outlook remains weighted to the topside, the bulls may be vulnerable heading into the June uptrend. These are the updated targets and invalidation levels that matter on the short-term WTI technical charts.

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Crude Oil Price Chart – WTI Daily

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

Technical Outlook: In last month’s Crude Oil Short-term Outlook we noted that WTI was, “approaching correction support – threat for downside exhaustion into the 200-DMA.” Price came within 0.8% of the 200-DMA before reversing higher with a breach above the August / April high-day closes at 82.84/83.24 fueling a rally of more than 20% off the monthly low. A pullback from uptrend resistance last week found support at the median-line yesterday and the focus is on this stretch back towards the yearly highs.

Crude Oil Price Chart – WTI 240min

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

Notes: A closer look at oil prices shows WTI trading within the confines of an ascending pitchfork formation extending off the May / June lows. A topside breach of the weekly opening-range / median-line yesterday keeps the immediate focus on a drive towards the October / November highs at 93.61 and key resistance at 95.78-96.52- a region defined by the 2.618% Fibonacci extension of the May advance and the 50% retracement of the 2022 decline. Both thresholds represent areas of interest for possible topside exhaustion / price inflection IF reached.  

Initial support rests at 88.76 with near-term bullish invalidation now raised to the 2013 low at 85.61- losses below this threshold would threaten a larger correction back towards the 83-handle.

Bottom line: The oil breakout is approaching uptrend resistance and while the near-term focus is higher, the bulls may be vulnerable on a stretch towards 96. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a rally towards resistance- losses should be limited to 85.61 IF price is heading higher with a breach / close above 96.52 ultimately needed to fuel the next major move. Review my latest Crude Oil Weekly Technical Forecast for a closer look at the longer-term WTI trade levels.

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

Follow Michael on Twitter @MBForex