Crude Oil Weekly Technical Outlook

Written by Oil N' Gold
Nymex Crude Oil (CL)

Crude oil's up trend continued last week and reached as high as 73.23 before turning sideway. With 4 hours MACD staying below signal line, initial bias is neutral this week. Some pull back might be seen to 4 hours 55 EMA (now at 69.40). But after all, note that recent rally should still be in progress as long as 66.79 minor support holds. Above 73.23 will target 38.2% retracement of 147.27 to 33.2 at 76.77 next. On the downside, however, note bearish divergence conditions in 4 hours MACD and RSI. Break of 66.79 support will argue that a short term top is at least formed and rise from 43.83 has likely completed. In such case, deeper decline should be seen to 56.07/60.08 support zone.

In the bigger picture, there is not clear sign of topping in crude oil yet and current rally might extend further to above 38.2% retracement of 147.27 to 33.2 at 76.77. But after all, crude oil is clearly overbought in daily RSI and some consolidations should be around the corner. Strong resistance will likely be seen between 76.77 fibo resistance and next key level of 90, (50% retracement of 147.27 to 33.2 at 90.23) and at least bring some pull back. Meanwhile, in case of a correction, focus will turn 54.66 key medium term resistance turned support. As long as it holds, we'd continue to favor the rally from 33.20 to continue further. But a break of 54.66 will be an important indication that whole rise from 33.2 low has completed and should turn outlook bearish then.

In the long term picture, note that fall from 147.27 is treated as a correction, or part of the correction/consolidation to the five wave sequence from 98 low of 10.65. Downside target of 17.12/37.0 support zone is already met and the correction might have completed already. Sustained trading above mentioned 55 weeks and 55 months EMA will add some credence to this case and should target next key level of 90, (50% retracement of 147.27 to 33.2 at 90.23). This will remain the preferred case as long as crude oil continues to stay above 54.66 support.