Photo by Timothy Newman on Unsplash

Crude Oil Technical Forecast - WTI Weekly Trade Levels

Crude oil prices plunged nearly 17% off the August highs, as WTI attempted to mark a third consecutive weekly decline on Friday. Despite the losses, the price has continued to hold above or within a critical support zone, and our focus has been on a pivot off this key threshold in the days ahead.

This remains a big moment for crude oil. These are the updated targets and invalidation levels that are significant on the oil price weekly technical chart.

Crude Oil Price Chart – WTI Weekly Chart

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

In my last oil price weekly technical forecast, we noted that WTI was “back at a critical support zone into the start of the month at a major inflection zone. The focus remains on a reaction off this key threshold into September - watch the weekly close.”

The zone in focus was the 85.61-88.01 range, and the price has been unable to close below this threshold for the past seven-weeks. A closer review of the price action has us re-amending that key zone into the 83.28-87.15 range – a region defined by the 2021 high-week reversal close, the 2013 low, and the 100% extension of the yearly decline.

The technical significance of this confluent pivot zone cannot be understated, and a close below this area could fuel another accelerated bout of losses. That said, the immediate downside remains vulnerable while within or above this key range.

A break lower exposes the first major support objective at the 2022 yearly open/2018 high at 75.35-76.87, backed by the August 2018 low/2019 high at 65.92-66.57. Both regions are of interest for possible near-term exhaustion if they are reached.

Weekly resistance stands with the 52-week moving average and the 25% parallel (currently ~92.88), with the broader bearish invalidation now lowered to the 38.2% Fibonacci retracement of the June decline at 94.40.

Bottom line: Oil prices have been testing a critical support pivot for over a month, and the focus remains on a possible inflection into this zone. From a trading standpoint, rallies should be limited by the 52-week moving average if the price is heading lower on this stretch, with a close below needed to fuel the next leg lower in WTI.

We continue to tread lightly here - this is a big level and a significant resolution in price may be just ahead. I’ll publish an updated crude oil price short-term technical outlook once we get further clarity on the near-term WTI trade levels.

Crude Oil Trader Sentiment – WTI Price Chart

• A summary of IG client sentiment shows traders are net-long crude oil. The ratio stands at +2.10 (67.74% of traders are long) – which is a typically bearish reading.
• Long positions are 16.83% higher than Friday and 13.73% lower from last week.
• Short positions are 10.52% lower than Friday and 4.43% higher from last week.
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US crude oil prices may continue to fall. Traders are more net-long than yesterday, but they are less net-long from last week. The combination of current positioning and recent changes gives us a further mixed WTI trading bias from a sentiment standpoint.

Oil - US Crude Sentiment: Mixed. Data provided by IG.

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