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Outlook for WTI crude oil

Jason Sen

WTI crude oil has staged a strong recovery since the very end of December and through the first quarter of this year, as you can see in the weekly chart below. The outlook from the weekly chart remains positive after we beat the blue 100-week moving average at $58.77 and the 50% Fibonacci level of $59.63.

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However, note the severely overbought conditions on the weekly chart. The short-term picture shows we need a more cautious approach. Firstly the 60-minute chart shows a potential broadening top pattern. The upper channel of this pattern is around the $60.80/60.90 area so a break above $61.00 would be positive for the start of this week.

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It is worth noting how the Bollinger bands have been working effectively on the four-hour chart in the last three weeks as oil entered more of a sideways direction. On Friday we tried a break above the upper boundary but the spike proved unsustainable and we quickly pulled back within the Bollinger bands.

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The most important resistance of the week can be seen on the daily chart below. The green upper boundary of the Bollinger band on the daily chart is rising in line with the price. At present this lies at about $61.25/30. Obviously it will rise towards more important trendline and red 200-day moving average resistance at $61.65/85 as the days pass this week.

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Clearly this is the main challenge for bulls and short positions need stops above 6200. A break higher, however, would be a buy signal targeting 6240/50 and 6310/20 before resistance at 6365/75.

Jason Sen

Technical Analyst & Trader

For more information and trading education visit InterTrader

The content of this article is the personal opinion of the author and not InterTrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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