Crude Oil Short-term Outlook: Oil Spill Searches for Support

Crude Oil Technical Outlook: WTI Short-term Trade Levels

Oil rally falters into yearly high- breaks multi-month uptrend support
Crude price pullback now approaching key technical support- risk for exhaustion low
WTI resistance 80.31, 81.35, 82.84-83.24- Support 76.00/75 (key), 74.25, 71.75

Crude oil prices plunged more than 5.7% off the weekly high with a break of uptrend support in WTI now approaching a make-or-break pivot zone. Battle lines drawn as we look for a low into the close of the month. These are the updated targets and invalidation levels that matter on the short-term WTI technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this crude oil setup and more. Join live on Monday’s at 8:30am EST.

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 the yearly open with, “A topside breach / close above 80.31 needed to fuel the next leg higher towards the yearly / April high-day close at 83.24 and the next major pivot zone near 85.61-86.56 – a region defined by the 2013 low and the 38.2% Fibonacci retracement of the 2022 decline.” Oil continued to rally into the August open with price registering an intraday high at 84.87 before exhausting. An outside-day reversal candle off the highs broke the June uptrend days later and the focus has been on this corrective pullback.

Crude prices have now plunged more than 8% off the high with WTI approaching the first major support hurdle near 76.50/75- a region defined by the 100% extension of the monthly decline (two-equal legs), the 38.2% retracement of the yearly range and the 2018 swing high. Note that the 200-day moving average rests just lower (~76) and the focus is on a reaction into this key zone IF reached.

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 a descending pitchfork formation extending off the monthly highs. Initial resistance now eyed back at 80.31 with near-term bearish invalidation now lowered to the objective weekly open at 81.35. Ultimately, a breach / close above the April / August high-day closes at 82.84-83.24 is needed to fuel the next attempt at a breakout of the yearly opening-range.

The immediate focus is on the 76.50/75 support range – IF this pullback off the highs is corrective in nature, losses should be limited to the 200-day moving average. Weakness beyond this threshold would threaten / suggest a larger trend reversal may be underway towards 74.25 and beyond.

Bottom line: A break below multi-month uptrend is now approaching correction support – threat for downside exhaustion into the 200-DMA. From a trading standpoint, look to close short-exposure on a stretch towards 76 IF reached – losses should be limited to the lower parallel with a breach / close above the weekly open needed to alleviate further downside pressure. Review my latest Crude Oil Weekly Technical Forecast for a closer look at the longer-term WTI trade levels.

Active Short-term Technical Charts

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

Follow Michael on Twitter @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.