Technical Highlights on Crude Oil:
- Trade around an area of macro resistance
- Monitor price action for confirmation or rejection
- This week could be pivotal
Oil is testing a major level dating back a decade. A sustained break above 77 could push WTI to much higher levels. Given decade-long resistance, seeing crude close above resistance on a weekly basis is key. With that in mind, this week could be crucial.
It’s hard to say how far oil can rise beyond resistance at this point, but the next roadblocks only arrive between 85 and 91, minor oscillation levels carved out between 2013 and 2014. The next very large resistance zone does not reach between 107 and 115, the high points of a wide range (hold) from 2011 to 2014.
It’s still much higher, so for now the focus will be on whether oil can hold above the 77 mark for some time. It’s entirely possible that we will see a rejection this week that marks a price reversal, so we will need to be patient and flexible around this key area of resistance.
If oil rejects lower, watch how August’s short-term trend support holds up. If a rejection sends crude below trend support then we could see it drop back below 70 quickly.
For now, the WTI seems to want to keep rolling, but we need to be aware of the importance of this area. A sustained breakout above 77 on a weekly close basis will be interpreted as a macro signal that it wants to continue. While lower rejection will at least suggest short-term weakness, maybe worse.
Weekly Crude Oil Chart (CL1!)
WTI Crude Oil Chart by TradingView
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— Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX