Crude Oil Weekly Price Outlook: Eight-Day Rally Faces First Major Test

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. Crude Oil has rallied every day since the start of the year with price now eyeing initial resistance targets. We’re looking for a reaction off this mark to offer guidance on whether a more significant low was registered last month, or whether this is simply a corrective bounce.

Here are the key targets & invalidation levels that matter on the Crude oil weekly chart into the start of the year.

CRUDE OIL WEEKLY PRICE CHART

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Notes: In last month’s Crude Oil Weekly Technical Outlook we noted that a break below confluence support at 45.45, ‘would risk substantial losses for crude with subsequent support objectives eyed at the 2017 low-week close at 43.09 and the highlighted slope confluence near the 40-handle.” Price registered a low at 42.34 into the close of the year before mounting a rally of more than 17% over the past three weeks. So, was that the low?

While it’s still too early to confirm, the technicals do highlight some interesting factors to consider. Last week’s advance marked the single largest one-week rally since mid-June – in that instance, crude rallied for two weeks before falling into a range which held the low for nearly 19-weeks before breaking. While this is just an anecdotal observation, it’s worth noting that weekly RSI is attempting to recover from oversold territory with price poised to mark the longest consecutive daily advance since May (in that instance price peeked nearly two-week later).

Key support remains at 45.04/45 (2018 low-week close / 61.8% retracement) with initial resistance eyed at 50.49. A breach above the median-line would be needed to suggest a more significant near-term low is in place with such a scenario targeting the 200-week moving average at ~52.12 and the confluence resistance zone at 55.21/53.

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