Oil Price Technical Forecast: Oil Rally Spills From Resistance

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

• Oil price rally extends into technical resistance- set to snap four-day winning streak
• WTI recovery vulnerable near-term- threatens exhaustion / price inflection
• Resistance 79.60, 82.39, 83.30- Support 76.90, 74.90-75.42 (key), 72.45/99

Oil prices surged nearly 12% off multi-month lows with WTI poised to snap a four-day winning streak. A turn from technical resistance threatens the recent advance and the focus is on a breakout of the weekly opening-range for guidance. These are the updated targets and invalidation levels that matter on the weekly, daily, and 240min 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.

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 major support hurdles into multi-month consolidation support- risk for downside exhaustion / price inflection just lower. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a test of the 2023 trendline near ~73- rallies should be capped by the 200-day moving average IF price is heading lower on this stretch with a close below the yearly open needed to mark downtrend resumption.”

Oil prices registered a close low at 72.95 before rebounding sharply with WTI breaking above the 200-DMA  yesterday (rally of more than 11.8% off the monthly low). The advance is faltering this week at the 52-week moving average (~79.67) and while the broader focus remains on a breakout of this multi-month consolidation pattern, the immediate advance may be vulnerable here.

Oil Price Chart – WTI Daily

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

The daily chart shows WTI continuing to trade within the confines of the descending pitchfork formation we highlighted last month. A recovery off the median-line is now testing downtrend resistance with a sliding parallel extending off the late-July high converging on the 61.8% Fibonacci retracement around ~79.60- risk for possible exhaustion / price inflection into this region.

Oil Price Chart – WTI 240min

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

A closer look at oil price action shows WTI faltering into this threshold today with the pullback now approaching initial support at the 200-day moving average near the 78-handle. Lateral support rests just lower at 76.90 and is backed by a more significant confluent zone at 74.90-75.42- a region defined by the 61.8% retracement of the August range, the July low-day close (LDC), and the 8/7 reversal close (both levels of interest for possible downside exhaustion IF reached).

A topside breach / close above this slope would shift the focus back towards consolidation resistance, currently near the July 7 reversal close at 82.39 and the July high-day close (HDC) at 83.30. Ultimately a breach / weekly close above the 84.39/57 hurdle would be needed to validate a larger breakout of the yearly consolidation pattern.

Bottom line: The oil rally has responded to confluent downtrend resistance and the focus is on this pullback. From a trading standpoint, losses should be limited to 74.90 IF price is heading higher on this stretch with a close above 75.690 needed to fuel the next leg in price.

Keep in mind we get the release of key inflation data tomorrow with July Retail Sales slated for Thursday. As always, stay nimble into the releases and watch the weekly close here for guidance.

We’ll review these charts in-depth in the Weekly Technical Outlook Webinar on Monday.

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

Follow Michael on X @MBForex