Crude Oil Technical Forecast: WTI Bulls Take Charge

Crude Oil Technical Forecast: WTI Weekly Trade Levels

• Oil breaks out of multi-month consolidation formation- bulls try for fourth weekly advance
• Crude rally approaching key technical hurdles into 2022 downtrend
• WTI resistance 77.86, 80.31, 82.68-83.28- support ~73, 69.19-70.06 (key), 65.62

Crude oil prices have surged more than 20% off the yearly lows with the bulls attempting to mark a fourth consecutive weekly-advance. A breakout of a multi-month consolidation pattern is now poised for a test key technical hurdles and the immediate advance may be vulnerable in the weeks ahead. These are the updated targets and invalidation levels that matter on the WTI weekly technical chart.

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Crude Oil Price Chart – WTI Weekly

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

Technical Outlook: In last month’s Crude Oil Price Forecast we highlighted a multi-month consolidation formation in WTI with price coiling just above a critical support pivot at 69.19-70.09- a region defined by the yearly low-week close and the 2022 low. We noted that, “Despite numerous intraweek attempts, price has been unable to mark a weekly close below this threshold with a nine-week consolidation pattern now straddling support- breakout pending.”

A topside breach two-weeks later has now stretched more than 15% off the June lows price attempting to mark a fourth consecutive weekly advance. The rally is now approaching a cluster of key technical considerations and the first real test for the bulls.

Initial resistance is eyed at the 100% extension of the May advance at 77.86- rallies would need to be capped by this threshold IF this rally is simply a correction within the broader downtrend. Just higher rests the 52-week moving average / objective yearly-open at ~79.35-80.31. Ultimately a topside breach / close above the 2023/2021 high-week closes at 82.68-83.28 would be needed to suggest a larger trend reversal is underway and validate a breakout of the yearly opening-range.

Initial weekly support now eyed near the 73-handle backed again by 69.19-70.09- this level remains critical and a break / close below would threaten another accelerated decline towards subsequent support at 65.62 and 59.16.

Bottom line: A breakout of a multi-month consolidation pattern takes crude prices into a series of key technical hurdles just higher. From a trading standpoint, look to reduce portions of long-exposure on a stretch towards median-line – losses should be limited to the 73-handle IF prices area heading higher here with a close above 83.28 needed to suggest a more significant low was registered back in May.  I’ll publish an updated crude oil short-term outlook once we get further clarity on the near-term WTI technical trade levels.

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

Follow Michael on Twitter @MBForex