Oil Short-term Outlook: Crude Spills into Support

Oil Technical Outlook: Crude Short-term Trade Levels (WTI)

• Oil snaps two-week winning streak- plunges back into key support pivot
• Crude October opening-range is preserved- breakout to offer guidance
• WTI resistance 88.17, 90.79, 91.78 - Support 82.84-83.24 (key), 80.31, ~78.12

Crude oil prices plunged back into a key support pivot at the October range lows and while the threat of a deeper correction remains, the immediate focus is on possible price inflection into this threshold. These are the updated targets and invalidation levels that matter on the short-term WTI technical charts into the monthly close.

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Oil Price Chart – Crude Daily (WTI)

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

Technical Outlook: In last month’s Crude Oil Short-term Outlook we noted that the WTI, “breakout is approaching uptrend resistance and while the near-term focus is higher, the bulls may be vulnerable on a stretch towards 96.” We specifically highlighted, “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.” Price registered an intraday high at 95.01 the following day before reversing sharply lower with a decline of more than 14.2% holding just above key support into the 83-handle. The battle lines drawn the close of the month.

Oil Price Chart – Crude 240min (WTI)

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

Notes: A closer look at oil price action shows WTI trading within the confines of a descending parallel formation with price holding just above key support at 82.31-83.24- a region defined by the 61.8% extension of the September decline, the August / April high-day closes, and the 38.2% retracement of the yearly range. Looking for possible inflection off this zone.

A break / daily close below this threshold would threaten a deeper correction towards the 2023 yearly open at 80.31 and the 200-day moving average (currently ~78.12). Key support / broader bullish invalidation rests 75.62-77.15- a region defined by the 61.8% Fibonacci retracement, the 2018 swing high, and the 100% extension. Losses must be limited to this threshold for the May uptrend to remain viable.

Weekly-open resistance is eyed at 88.17 and is backed by the monthly open at 90.79. Ultimately, a breach / close above the yearly high-day close at 91.78 is needed to mark resumption of the broader uptrend towards the 2022 October / November highs at 93.61 and the next major resistance hurdle at 95.77-96.52.

Bottom line: The oil correction is at a major support pivot with the October opening-range preserved into the close of the month- look for the break. From a trading standpoint, the threat remains tilted to the downside while below the weekly open (88.17) and we’re on the lookout for an exhaustion low heading into November. The immediate focus is on possible inflection off the 82.31-83.24 support pivot- watch the weekly close here. 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