In this series, we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. US Crude Oil prices have fallen more than 10% form the October high with the price now approaching critical multi-year slope support. Here are the key targets & invalidation levels that matter on the Crude Oil (WTI) weekly chart.
CRUDE OIL WEEKLY PRICE CHART (WTI)
Notes: Earlier this month we highlighted the threat of a reversal in crude as prices approached multi-year highs into the start of Q3. The subsequent pullback now looks to challenge critical support at the lower parallel of the broad ascending pitchfork formation we’ve been tracking off the 2016/2017 lows. It’s make-or-break for the bulls as price tests this multi-year slope support.
A break/weekly close below the September outside weekly-reversal close at 67.83 is needed to validate the break with such a scenario risking a decline towards confluence support at 64.27/65.20 – a region defined by the June close-low, the 23.6% retracement of the 2016 advance and the 52-week moving average. Weekly resistance now back at 74.27/94 (high-week close / 2011 low) with critical resistance steady at the 2008 trendline / 2012 low at 77.26.
Bottom line: Crude prices are testing multi-year uptrend support – look for a reaction heading into 67.83and watch the weekly close. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops. We’ll be on the lookout for possible exhaustion in near-term price action while above this level. Note that weekly RSI has been in a contractionary range since the start of the year with momentum triggers lined up on both sides of the market- the break should offer further guidance/conviction on our medium-term directional bias.
