Crude Oil forecast for the week of February 20, 2017, Technical Analysis

WTI Crude Oil

The WTI Crude Oil market fell slightly during the week, as we continue to show signs of struggle. I believe that the $55 level above is massively resistive, and it’s not until we break above that level that it’s possible to start buying again. I think that the market is starting to run out of momentum in a massive way, and we could see a very impulsive move to the downside. However, we don’t have that signal yet, and we would need to break down below the $50 level for a longer-term sell signal. Because of this, I believe that it’s likely that the market should be traded off of daily chart, possibly even shorter time frames than that. If we do breakout to the upside, I believe that the market will have a hard ceiling at the $60 level.

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Brent

Brent markets fell a bit during the week, testing the $55 level. There is a significant amount of support just below though, so I’m not willing to sell you. In fact, I believe that the market needs a breakdown below the $53 level to give that signal. If we break above the $58 level, the market should then go to the $60 handle. Ultimately, I think that the Brent market is much like the WTI market, in as much as it needs to be traded off shorter-term charts. The market continues to be volatile as traders continue to see volatility, as we are arguing between OPEC production cuts, and oversupply.

The US dollar of course has an effect on this market as well, so if the dollar rallies, that could put bearish pressure on oil markets also. Even if we do breakout to the upside, I think that the rally is fairly close to being over with, but of course I will have to trade the markets as they present themselves. No matter what happens, I think you can expect quite a bit of volatility and once we finally do make a decision, it will probably be explosive.