Talking Points
- Crude Oil Technical Strategy: Favoring Downside Under $44.70
- Critical Daily Support Found at $43.00
- Sentiment Points Toward Price Declines; 56% of Positioning is Long
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The price of WTI Crude Oil (CFD: USOil) is breaking lower this Friday, ending a significant period of consolidation for the commodity. Crude Oil prices had previously been range bound between resistance at $46.90 and support at $44.47. With this morning’s breakout, prices are now trading off new weekly and monthly lows, which currently reside at $43.90.
WTI Crude Oil Price (UsOil), Daily Chart
(Created using Marketscope 2.0)
This daily breakout lower, has signaled a resumption of bearish momentum that has been developing since Crude Oil put in its 2016 high at $51.64. This high is still working as a value of resistance for the commodity, but next support may be found near the May 2016 low at a price of $43.00. A move through this value next week would be significant. It would suggest that the 2016 rally has indeed faltered, and open the commodity up to further speculation on further price declines.
Traders should note that if prices rally above $43.00, it opens Crude Oil prices to technically trade in a series of consolidating price patterns. In this scenario, traders should continue to monitor the market for the creation of new highs to symbolically represent the resumption of Crude Oil’s bullish trend.
WTI Crude Oil (UsOil) Daily Chart
Sentiment for WTI Crude Oil (Ticker: USOil) has flipped positive with SSI (speculative sentiment index) reading at +1.30. With 56% of positioning net long, this may indicate further losses for Crude Oil prices. In the event that Crude Oil prices break lower, traders may look for SSI to move towards a positive extreme of +2.0 or greater. Alternatively, if Crude Oil bounces from support, SSI may flip back to a negative reading.
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