WTI Crude Oil Technical Analysis and Short-Term Forecast
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January WTI crude oil continues to trade in a weeks-long range. Each time WTI crude oil has been poised to break higher or lower out of the range a reversal has taken place. This looks to be the case again this week. The move up from the $66.4 double bottom was poised to break higher upon a close above the $72.6 equal to (1.00) target of the wave up from $66.32. However, Monday’s bearish engulfing line and today’s move below the 62 percent retracement of the rise from $66.53 and smaller than (0.618) target of the wave down from $71.51 around $68.4 imply that another test of the bottom of the range will probably take place in the coming days.
The wave down from $71.51 calls for a test of its $67.4 equal to target. This will push prices below the $67.9 smaller than target of the wave down from $72.41. Settling below $67.9 will clear the way for an eventual test of this wave’s $65.6 equal to target, which is also the larger than (1.618) target of the wave down from $71.51. The connection to $65.6 is also made through the $66.3 intermediate (1.382) target of the wave down from $71.51, which is in line with the $66.4 double bottom. Therefore, closing below $67.9 will put WTI crude oil in a position to break lower out of the trading range.
That said, the $68.4 target held on a closing basis and prices have risen from the $68.05 swing low this afternoon. The move up from $68.05 is likely a simple correction and is expected to hold the 38 percent retracement from $71.51 at $69.4. Overcoming this would call for a test of the 62 percent retracement and $70.3 swing high. Overcoming $70.3 would invalidate the wave down from $71.51 that calls for $67.4 and lower. This would also call for a test of key near-term resistance and the smaller than target of the wave up from $66.53 at $71.1. Settling above $71.1 would shift the odds in favor of WTI crude oil attempting to break higher out of the range again by settling above $72.8, a threshold that this split between the equal to target of the waves up from $66.32 and $66.53 and above the confirmation point of the $66.4 double bottom.
