Outlook on crude oil prices:
- Crude oil prices It lacks directional conviction after failing to breach last week’s confluence resistance
- WTI futures have been swinging back and forth between $77.50 and $74.00 in recent days, waiting for the next market catalyst.
- This article is looking at oil Key technical levels to watch in the upcoming trading sessions
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Crude oil as measured by WTI futures has rallied strongly since late June through the first two weeks of this month, but the bullish momentum faded after prices failed to breach confluence resistance above the $77.00 handle, where the 200-day SMA coincides with the upper bound of a medium-term downtrend channel.
The daily chart below shows how the commodity is lacking directional conviction after the latest technical rejection, with prices swinging back and forth between $77.50 and $74.00.
WTI futures will need to break out of the previously discussed trading range before the next significant move in the energy sector can begin. Based on this hypothesis, there are two possible tactical scenarios that need to be analyzed in light of the current market dynamics.
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The first scenario: the outbreak of resistance
The 200-day SMA, which is hovering above the psychological level of $77.00, along with the channel resistance, will be a difficult barrier for the bulls to overcome. However, in case of an upside breakout, the buyers could get emboldened to launch an attack at the $79.00 level. With more strength, focus moves higher to $83.00, near this year’s peak.
Scenario 2: Support collapse
Looking at the chart below, the support at $74.00 looks more fragile and easier to take out, so the bears may have an advantage in terms of regaining the upper hand. However, if oil can slip below $74.00 decisively, selling interest could increase, paving the way for a move to $72.50. There could be more losses in store on a push below this floor, with the next downside area of interest at $71.85, followed by $70.00.
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