Crude Breakout Spills into 2021- Resistance Ahead

  


Crude Oil Technical Forecast: WTI Weekly Trade Levels

  • Crude Oilupdated technical trade levels – Weekly Chart
  • WTI breakout extends into yearly open– risk for inflection off near-term uptrend resistance
  • New to Oil Trading? Get started with this Free How to Trade Oil-Beginners Guide

Oil prices have surged more than 51% off the November lows with WTI rallying to fresh multi-monthly highs into the 2020 open. The oil breakout is now testing initial uptrend resistance and while the broader outlook remains weighted to the topside, the immediate advance may be vulnerable while below this threshold. These are the updated targets and invalidation levels that matter on the oil price weekly chart. Review my latest Strategy Webinar for an in-depth breakdown of this crude oil price setup and more.

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Crude Oil Price Chart – WTI Weekly

Crude Oil Price Chart - WTI Weekly - CL Trade Outlook - Technical Forecast,

Chart Prepared by Michael Boutros, Technical Strategist; Crude Oil (WTI) on Tradingview

Notes: In my last Oil Price Outlook we noted that the recovery in WTI was approaching technical downtrend resistance at, “42.02/43.08– a region defined by the 2017 low / low-week close. Note that the upper parallel converges on this range in the weeks ahead and further highlights the technical significance of this key resistance zone with the multi-month rally at risk while into this threshold.” Crude prices held below this level for nearly three months before breaking out in late-November with the subsequent rally trading within the confines of an ascending pitchfork formation extending June / November lows.

The advance is now approaching confluence resistance at the upper parallel / June 2019 lows at ~50.58– looking for inflection off this zone for guidance. A breach / close above this threshold is needed to keep the immediate long-bias viable towards the 2016 high at 54.48 and the 2020 high-week reversal close at 59.16. Weekly support rests along the 75% parallel (currently near ~47.30s) with near-term bullish invalidation now raised to 42.02-43.08.

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Bottom line: The oil price breakout is now testing the first major resistance confluence and we’re looking for a reaction up here. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – look for downside exhaustion ahead of the median-line on pullbacks IF price is indeed heading higher with a weekly close above the upper parallel needed to keep the bulls in control. Stay nimble heading into the close of the week as price carves out the monthly opening-range.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Crude Oil Trader Sentiment – WTI Price Chart

Crude Oil Trader Sentiment - WTI Price Chart - CL Trade Outlook - Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-short crude oil – the ratio stands at -1.61 (38.28% of traders are long) – typically bullish reading
  • Long positions are 26.16% lower than yesterday and 18.23% lower from last week
  • Short positions are44.94% higher than yesterday and 28.72% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil – US Crude prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil – US Crude-bullish contrarian trading bias.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily -8% -2% -5%
Weekly -18% 24% 4%

Previous Weekly Technical Charts

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex





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