WTI Crude Oil Technical Analysis and Short-Term Forecast
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WTI crude oil settled below the 62 percent retracement of the rise from $70.88 and the intermediate (1.382) target of the first wave down from $78.54. This was bearish for the outlook because the close below the 62 percent retracement implies that the move up from $70.88 is a completed correction and has increased the likelihood that a long-term bearish decision point at $71.2 will be tested again.
The 78 percent retracement and larger than (1.618) target around $72.6 were tested and held on a closing basis today. Another test of $72.6 is expected within the next day or so. Closing below $72.6 will call for a minor target at $71.8 that connects to the long-term bearish decision point at $71.2. The $71.2 objective is most important because it is the smaller than (0.618) target of the wave down from the $84.32 October contract high, the equal to (1.00) target of the wave down from $83.45, the smaller than target of the wave down from $82.62, and the 62 percent retracement of the rise from $64.38. A sustained close below $71.2 will open the potential for a decline into the mid-to-low $60s in the coming months.
Nevertheless, the confluence of $72.6 makes this a level from which a test of resistance might take place before the move down extends and tests $71.2. Today’s long upper and lower candlestick shadows also reflect a bit of near-term uncertainty. A further move up from $72.54 will likely be a correction and is expected to hold key near-term resistance at $74.8. Overcoming $74.2 will call for a test of $74.8. Settling above $74.8 would warn that the move down from $78.54 is failing.
