WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil continues to trade in an indecisive trading range. Today’s initial move up fulfilled the $60.7 smaller than (0.618) target of the primary wave up from $57.25. This was bullish, but the move stalled and the pullback from $60.9 suggests another test of support will probably take place tomorrow. This is a tight call, but near-term odds lean in favor of $58.4, a move below which will call for $57.2. Settling below $57.2 will cause a break lower out of the trading range and call for a test of a bearish decision point at $55.7 that connects to $51.7 and lower.

With that said, fulfilling the $60.7 smaller than target of the primary wave up from $57.25 implies that while the $57.63 swing low holds this wave still has good potential to extend to its $62.5 equal to (1.00) target. The connection to $62.5 is made through $61.2, the smaller than target of the wave up from $57.63. Closing above $62.5 would shift near-term odds in favor of testing the $63.8 bullish decision point. Closing above this would strongly suggest that the corrective move down is complete and clear the way for the uptrend to extend to new highs in the coming weeks.

The primary takeaway is not the direction of the call but rather the implications of either a close below $61.2 or above $62.5. Everything else that happens between those levels will likely be noise. Closing beyond either threshold would then call for a test of the longer-term bearish or bullish decision points at $55.7 or $63.8, respectively.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil briefly overcame the $62.04 swing high and invalidated the prior primary wave down from $67.79. However, the move up stalled and a bearish intra-day head and shoulders pattern has formed. The wave down from $62.27 that forms the pattern’s right shoulder is poised to challenge its $59.8 smaller than (0.618) target tomorrow. This is in line with the neckline of the head and shoulders pattern. Closing below $59.8 will call for $59.0 and possibly $57.6, the lower of which is near the target of the head and shoulders. Settling below $57.6 might be a challenge ahead of the OPEC+ meeting later this week but would clear the way for a test of the $55.7 smaller than target of the newly formed primary wave down from $67.79. The $55.7 objective has become a bearish decision point because a sustained close below this will call for a decline toward the primary wave’s $51.7 target.

With that said, trading is expected to be erratic for at least another few days. During the past eight trading sessions each time the market looks like it will fall it rises, and vice versa. Therefore, caution is warranted.

Should WTI crude oil hold $59.8 and overcome $61.6 early tomorrow, the head and shoulders pattern will likely fail (it could still transmute into a complex head and shoulders provided $61.6 holds). In this case, look for a test of $62.7 and possibly $63.9. The $63.9 level is a bullish decision point because this is the 62 percent retracement of the decline from $67.79 and is near the larger than (1.618) target of the primary wave up from $57.25. Settling above $63.9 would imply the corrective move down is complete and open the way for $64.6 and likely higher.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Technical Analysis and Short-Term Forecast

The near-term outlook for WTI remains bearish. Originally, it looked as though the move down from $67.79 was unfolding as a five-wave pattern that targets $54.9 or, more likely, $53.7. However, Waves I and III lack clear five-subwave counts. This does not negate the possibility of a five-wave move, but it does imply that the decline might be a three-wave extension that targets $52.5 instead. Nonetheless, in either case, the wave count, whether five- or three-waves, calls for the decline to continue toward targets in the low $50s.

As a five-wave move, $57.0 is crucial because this is the smaller than (0.618) target of Wave III and connects to $53.7 as the equal to (1.00) target. The $53.7 objective is also the XC (2.764) target of Wave I and the lowest that this wave projects. The trend terminus for Wave I is $54.9, but $53.7 makes more sense for the five-wave move because falling to $53.7 would makes Waves III and V equal. This also means that $53.7 would be the most probable stalling point for a five-wave pattern. Therefore, once $53.7 is met, a three-wave correction, or more, would be expected.

As a three-wave extension, the decline from $67.79 targets $56.3 as the smaller than target and then connects to $52.5 as the equal to target. Therefore, a three-wave extension is a bit more bearish for the near-term outlook than a five-wave pattern.

Tomorrow’s early action should shed more light on the wave count. Currently, it looks like the decline is more likely a three-wave extension because the subwave down from $62.04 has taken out its smaller than target and calls for a test of its $56.3 equal to target. However, should $57.0 hold and a decent retracement takes place (along the lines of $1.50 to match the retracement from $58.47 to $59.98), the decline is probably a five-wave trend. Again, either way, there is a good chance for WTI to fall and fulfill targets in the low $50s in the coming days.

Regarding near-term resistance, look for $58.4 to likely hold. Key near-term resistance is today’s $59.5 midpoint. Settling above this will dampen near-term odds for a continued decline and call for a test of $60.2 and possibly today’s $61.3 open before the decline continues.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil Technical Analysis and Short-Term Forecast

The near-term outlook for WTI crude oil tightened again today. The decline to $63.8 tested the 78 percent retracement of the rise from $63.13. More importantly, the move down took out the smaller than (0.618) target of the first subwave down from $66.4. This wave favors a test of its $63.4 equal to (1.00) target, which is also the smaller than target of the primary wave down from $67.98. Falling below $64.3 early tomorrow will call for a test of $63.4, a close below which will clear the way for $62.5 and likely $61.6. Such a move could prove to be significantly bearish for the outlook in the coming weeks because falling below $63.4 will call for a move below the 20-day moving average. Since early November this is a threshold that has been tested and held on a closing basis several times. Therefore, closing below the 20-day moving average, which should be just below $63.4 tomorrow, would likely trigger a much more significant and long overdue test of support.

With that said, the long-term outlook for WTI crude oil is undeniably bullish, and bearish setups like this have failed repeatedly during the past several weeks. Moreover, this is an extremely tight call for the next few days because the small intra-day double bottom that formed at $63.8 was confirmed by the close above the $64.67 intra-day swing high. The exact target for the double bottom is the $65.54 swing high. Overcoming $65.54 would invalidate the first subwave down from $66.4 that projects to $63.4 and clear the way for a test of $65.8 instead. This is the smaller than target of the wave up from $63.13 and connects to $67.0 and higher.

In summary, the next substantial move for WTI crude oil will likely be determined by either a close below $63.4 or above $65.8. As of this afternoon, odds lean slightly in favor of at least a test of $63.4. A move below $64.3 early tomorrow will increase those odds. However, should WTI overcome $65.54 first, odds will shift in favor of testing $65.8 instead.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.