(MENAFN- DailyFX) Crude Oil Price Highlights:WTIcrude oiltrading at 2016 t-line, lower-high could be near Brent oil trading at underside of multi-month channel Short-term price structures to pay attention to To see what fundamental drivers are expected to drive oil through the remainder of the quarter, check out theQ2 Crude Oil Forecast.
WTI crude oil trading at 2016 t-line, lower-high could be near The WTI crude oil contract is getting a lift off confluent support after looking like it might have been dead in the water. This has kept the upside in play, but a broader bullish outlook could quickly come back under fire if we see a meaningful turn lower from around current levels.
The Feb 2016 trend-line is just above the overnight high. A turn down from there will immediately have support in focus, but even as such price action will certainly increase the probability that recent strength will result in a lower-high relative to the peak carved out in April.
To validate this scenario the channel line from January will need to be broken along with the 200-day and the powerful reversal-day low on May 6 at 59.98. Looking a little deeper, on the hourly chart a channel is developing with a clear set of boundaries thus far.
This pattern, with a little more time, developing between resistance and support could offer traders even greater clarity as to how to play oil. A breakout of a well-defined range could offer a decisive trading bias, with the downside likely holding more power given the strong level of support that will have to be breached in order to get oil rolling downhill.
WTI Crude Oil Price Chart (underside of 2016 t-line)
WTI Crude Oil Hourly Chart (channel forming)
Brent contract may be more vulnerable should weakness set in The Brent contract is postured a little bit differently with its notable resistance level arriving at the underside of the same channel that WTI is still using as support. It has seen one powerful rejection of this line, occurring last Monday.
The technical structure on the short-term chart also has a bit of a variation too when compared WTI. Brent is taking on more of the shape of a rising corrective-looking wedge. This implies the sea-saw price action of late will lead to a down-move soon.
A solid downside break of the pattern will quickly have pressure brought on the 69.23 low from May 6 and the 200-day that lies only about 10 cents beyond there. A break of both of these thresholds should usher in another round of selling. No downside break, then look for neutral to higher prices, but from where I sit it won't hold as much appeal for a long.
Brent Crude Oil Daily Chart (underside of January-May channel)
Brent Crude Oil 4-hr Chart (corrective-looking wedge)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
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