Oil Price Technical Forecast: WTI in Free Fall

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

Oil price plunge more than 21.4% off July high- breaks multi-year consolidation pattern
WTI risk for further losses- first major technical hurdle in view- CPI, FOMC on tap
Resistance 71.33/92, 74.39 (key), 77.65- Support 65.62-66.57 (key), 63.63, 60.31

Oil prices have plummeted more than 21.4% off the July highs with WTI breaking below a multi-year consolidation pattern. The decline is now approaching the first major technical hurdle and although the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into this threshold. 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 had, “plunged into the lower bounds of a multi-year consolidation pattern with the bulls defending yearly-open support this week- the focus is on possible inflection off this pivot zone. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – rallies would need to be limited to the 200DMA IF price is heading lower on this stretch with a close below the yearly open needed to fuel the next leg.”

Oil rallied nearly 8.6% off the lows before exhausting just cents from the 200-day moving average days later. The subsequent reversal broke below key support last week with WTI plunging more than 13.4% off those highs. The break below the 2023 consolidation pattern keeps the outlook weighted to the downside while below the objective yearly open at 71.33 with the next major technical confluence already in view.

Oil Price Chart – WTI Daily

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

A look at the daily chart shows the decline trading near the December lows at 67.69 with price straddling the median-line of the descending pitchfork we have been tracking off the yearly highs. A key lateral support confluence is seen just lower at 65.62-66.57 – a region defined by the 2020 high, the 2023 close low, and the 2019 high. Look for a larger reaction in price there IF reached.

Oil Price Chart – WTI 240min

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

A closer look at oil price action shows WTI struggling at the median-line with the weekly opening-range straddling this slope. Resistance is eyed back at the objective yearly open / August low-day close (LDC) at 71.33/93. Broader bearish invalidation is now lowered to the objective September range high at 74.39 with a breach above the upper parallel ultimately needed to suggest a more significant low is in place / reversal is underway.

A daily / weekly close below this 65.62 is needed to mark downtrend resumption with subsequent support objectives eyed at the 2023 swing low at 63.63 and the 100% extension of the 2023 decline at 60.31 (both areas of interest for possible downside exhaustion IF reached).

Bottom line: Oil plummeted through key support last week and cleared a multi-year consolidation pattern- the technical outlook remains weighted to the downside while in this formation. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 65.62- rallies should be limited to the 71.92 IF price is heading lower on this stretch with a close below this pivot zone needed to mark downtrend resumption.

Keep in mind we get the releases of key US inflation data tomorrow (CPI) with the highly anticipated FOMC interest rate decision on tap next week – stay nimble into the releases and watch the weekly closes here. We’ll review these charts in-depth in the Weekly Technical Outlook Webinar on Monday morning.

Active Weekly Technical Charts

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

Follow Michael on X @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.