Oil Prices Forecast – WTI Breaks Out Above 40, Can It Really Maintain?

CRUDE OIL PRICE TECHNICAL ANALYSIS

  • A new pattern has defined the Western Texas Intermediate (WTI) crude oil price action as a rising wedge forms with the $40-mark playing a major role.
  • Some weeks ago, the inverse head and shoulder were built with a neckline that was defined at the 40-level. This resulted in a topside breakout with the WTI closing the gap left from the March demand. But since March, it has been a cat and mouse price action.
  • The WTI prices of crude oil made a very strong jump back on Friday to remove the last week’s losses, but basically, this week’s WTI price action closed poorly.

WTI CRUDE OIL STILL STRUGGLING AT US$40, WILL THE BULLS TAKE OVER?

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Having started with the long-term, this has been a very quiet week about crude oil prices. This week’s price chart shows a small doji within the $40 handle that was realized a few weeks ago. In our previous post, WTI Crude Oil Finds Strong Resistance After End of Week Rally we discussed the near term head and shoulder inverse pattern that had built in a settled at the 40-mark for this neckline. This further opened the door to a fast breakout. It filled the gap that had been left since the march sell-off. However, after this gap has been closed, the traders opted for the sideways to exist and the price action nudged back under the $40 mark. As of now, three weeks afterward, the price action remains intertwined with the 40-level.

On the weekly chart below, you can see the week’s doji, which follows the resistance interaction, surrounding the gap-fill area from the end of June. Because this gap has already been filled, the prices of oil haven’t shown a reasonable trend, not yet!

Oil Price Forecast Chart

Oil-Price-Forecast-WTI

Oil Makes A Recovery With the End of the Week’s Rally, Remains In A Surging Wedge

This has been a quiet week in the crude oil price action. But there has been another form of exchange rates at play. This is the rising wedge pattern. This has also been discussed here WTI Crude Oil Hovers Around $53.00 Ahead of API Stocks Change Report.

The main difference between the head and shoulders inverse and the rising wedge evaluated before is an important aspect of directional expectation. Essentially, the inverse head and shoulders will be approached in a reasonable bullish manner. This is after taking a close look at the horizontal resistance to assess the bullish potential, as outlined by the high-lows comprising the shoulders right side.

However, the rising edge will usually be approached from the bearish vantage point. This examines the significant lack of focus that the bulls have shown around the rests for highs. Or the resistance to ultimately control for a nudge via support.

Crude Oil 8-Hour Chart

Oil-Price-Forecast-WTI-Jumps-Back

WTI CRUDE OIL TECHNICAL FORECAST – BEARISH

Next week’s forecast will be pre-defined to bearish for crude oil. This will be because of the surging wedge as the $40-handle at the 41.34 Fibonacci continue showcasing resistance.

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