Dive into the key levels and implications that could shape the future of black gold.
In today’s oil price forecast, I decided to share with you my insights from today’s Oil Trading Alert. Have a nice read!
Technical Picture of Crude Oil
Let’s start today’s analysis by quoting the Oil Trading Alert posted on Jan.13:
(…) What’s next?
Taking into account the importance of this resistance line and the proximity to the next solid resistance zone (marked with the red ellipse with 4 and created by the long-term red resistance line [based on the Sept.28, 2023 and the Apr. 12, 2024 peaks], the Oct.8, 2024 peak & the bearish engulfing candlestick formation formed on the same day and the 50% Fibonacci retracement [based on the Sept. 2023 – Sept. 2024 downward move]) it seems that the space for gains may be limited and correction of the recent increases in the coming week should not surprise us (…)
Looking at the daily chart, we see that the situation developed in line with the above assumptions and crude oil turned south on Jan.16.
From today’s point of view, we see that although oil bulls managed to push the price higher once again after the quoted alert was posted their joy did not last long, as the next trading session brought a fierce counterattack from the bears.
The move pushed the price back down to the previously broken red resistance lines. The battle that took place in this area ended in a crushing defeat for the bulls and an invalidation of the earlier breakout. This technical setback fired up the bears even more, leading to further pressure in the following days and driving the price below the lower orange consolidation line.
As you know from many of my previous alerts, this kind of price action signals the activation of a bearish scenario. So, what does it mean for black gold in this case?
Well, considering the height of the mentioned consolidation, the downward move could potentially reach the area around $73 in the coming day(s).
However, in my opinion, such price action will be more likely if the sellers manage to strip the bulls of their nearest technical ally – the green supportive gap ($73.92-$74.29) from Jan.10. At this point it is worth noting that an additional advantage for the bears will be the close of today’s session below the 38.2% Fibonacci retracement (at around $74.25) based on the entire Nov.18, 2024 – Jan.15, 2025 upward move.
Having said that, let’s take a closer look at the 4-hour chart below.
From this perspective, we clearly see that crude oil futures are moving within the orange downward channel, heading toward the aforementioned target.
Before we dive into summarizing recent events, it’s worth mentioning that Monday started with a bearish price gap ($74.47-$74.66), which remains open at the moment of writing these words and continues to support the sellers’ pro-declining plans – just like one more technical factor – an invalidation of the earlier breakout above the upper line of the green rising trend channel (marked with dashed lines).
Taking this fact into account, it seems that we might also see the realization of the following scenario, which you may have read about on Jan.14:
(…) If the sellers manage to invalidate the earlier breakout above the channel, it would be a strong bearish development, which will likely open the way to the next support area based on the previously broken Nov.7, 2024 intraday peaks and the Jan.3 & Jan. 9 lows.
Summing up, crude oil futures failed to stay above the long-term red resistance line based on the mid-Apr. and early-Jul. peaks, which translated into a pullback that invalidated the earlier breakout. Such negative development triggered further deterioration and drop below the lower line of the orange consolidation, activating the pro-bearish scenario and suggesting further deterioration – especially if today’s price gap remains open and the bears took the price below the nearest supports.
Have a profitable day and see you tomorrow.
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Anna Radomska