Late last week, May WTI crude oil fulfilled the $67.3 smaller than (0.618) target of the wave $57.6 – 66.55 – 61.81. Although prices settled above this on Friday the move up struggled to extend and an evening star setup with two stars formed. This reversal pattern’s $66.2 completion point was challenged Monday and again today, but so far prices have failed to close below $66.2. In addition, bullish intra-day momentum divergences were confirmed at today’s $65.56 swing low and the daily chart formed a pseudo bullish hammer.
The long-term outlook for WTI crude oil remains bullish, but it is a very tight call for the near-term. Given the most recent near-term factors are positive, look for a test of at least $67.0 and possibly $67.4 tomorrow. A close above the latter would open the way for a new high of $68.3, which then connects to $69.1 and higher.
That said, given the balance between near-term positive and negative technical factors it is too soon to throw in the towel on the likelihood of a larger downward correction before the move up continues. A close below $66.2 will increase odds for such a move but the key near-term level is $65.6. Settling below this would open the way for $65.1, which then connects to $64.5 and lower.
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