Crude oil prices surged this week, with WTI (West Texas Intermediate) reaching multi-month highs, and now challenging the possibility of breaking out of a six-month downtrend. The key focus is on whether WTI can maintain momentum above the 2024 yearly open, as it faces several critical resistance levels.
Key Resistance and Support Levels
Resistance: 73.87/91, 75.55/60, 77.15-78 (key)
Support: 71.90-72.45, 71.33 (key), ~70
Technical Outlook
WTI oil prices broke out of a well-established range this week, threatening to push beyond the downtrend that has been in place since July. The price action is now drawing significant attention on the weekly, daily, and 240-minute WTI charts.
Earlier this year, in a previous oil price forecast, it was noted that WTI was facing resistance near the yearly open at 71.33. A close below 65.62 was needed for a larger decline, but WTI managed to hold above that level and recently broke through, rallying more than 10% from December’s lows. As the price continues to rise, the focus now shifts to how WTI performs at key resistance levels and the weekly close relative to 71.33.
WTI Daily Chart Analysis
The daily chart reveals that WTI is testing the possibility of breaking out of the descending pitchfork pattern that has been in place since July. The rally paused just ahead of initial resistance near the October high-day close (HDC) and the 61.8% retracement of the October decline at 73.87/91. If WTI reaches this level, traders should watch for a potential reaction, with a breach or close above this level signaling a breakout.
WTI 240-Minute Chart Analysis
On the 240-minute chart, WTI appears to be trading within an ascending pitchfork pattern that has developed from the December lows. The 75% parallel of this pitchfork highlights near-term resistance around the 73.87/91 region. Initial support is found between 71.90-72.45, which includes the 2025 yearly open, the August low-day close, and the June swing low. A drop below 71.33 would signal a potential failure of the breakout.
For the bullish outlook to remain intact, WTI must hold above 71.33, with key support resting at the lower parallel near 70. A break above 73.91 would mark the resumption of the uptrend, with next resistance targets at the 52-week moving average and the 1.618% extension of the December rally, which lies near 75.55/60.
The most significant resistance remains at 77.15-78.02, and a large reaction is expected if that level is reached.
Conclusion
WTI is currently in a critical phase, with prices breaking out of a multi-week range and threatening to end a six-month downtrend. However, the price faces significant resistance ahead, particularly around 73.87/91. The key support levels, particularly near 71.33 and the 70-handle, will be crucial in determining whether the bullish breakout can continue.
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