WTI Crude Oil Technical Analysis and Short-Term Forecast
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WTI crude oil has been on a wild ride during the past few weeks. Prices rallied and settled above the 62 percent retracement of the decline from $82.59 and the intermediate (1.382) target of the wave up from $64.61 on Monday. The November contract also overcame an important $77.45 swing high early Tuesday. These factors were bullish for the outlook and implied that WTI crude oil was adopting a much firmer bullish outlook.
However, Tuesday’s early move up stalled at $78.46, just below the 78 percent retracement from $82.59 and the $78.9 larger than (1.618) target of the wave up from $64.61. The subsequent move down from $78.46 formed a daily bearish engulfing line and confirmed a daily Stochastic overbought signal. The 38 percent retracement of the rise from $64.61 held on a closing basis, but the bearish engulfing line calls for a deeper test of support tomorrow and warns that a bearish reversal will continue to unfold.
Another test of $73.2 is expected. Settling below this will indicate that the move down from $78.46 is more than just a simple correction of the rise from $64.61. This will also call for a test of the 50 percent retracement and 50-day moving average at $71.6 and possibly the 62 percent retracement at $69.9 in the coming days. Settling below $69.9 will confirm a bearish reversal and call for the $67.9 smaller than (0.618) target of the new wave down from $81.75 to be challenged.
Tuesday’s decline reflects a shift in sentiment, given that the geopolitical factors that had driven prices higher have not led to supply disruptions. Even so, should geopolitical tensions rise again, prices will likely push to challenge $78.9 and higher.
Should WTI crude oil rise tomorrow and overcome the 38 percent retracement from $78.46 at $74.9 look for a test of the 62 percent retracement at $76.3. Settling above $76.3 would indicate that the move down has failed and put the near-term odds back in favor of challenging $77.8 and $78.9 within the next few days.
