Crude Oil Price Forecast: Exhaustion into Multiple Long-term Highs

Crude Oil Technical Highlights:

  • Oil trading at multiple highs created from 2011-2013
  • Thursday turnabout highlights an exhaustion pattern
  • Outlook is neutral to lower in the very near-term
  • Bonus Chart: Gasoline futures (RBOB)

WTI crude oil run appears to have come to a pause, at least in the near-term. Thursday’s sharp $10 turnabout indicates exhaustion in recent buying and sets it up to trade sideways to lower. Adding conviction to this notion is where the reversal occurred.

There are several peaks that were created in each year from 2011 to 2013 in the vicinity of 111 to 115. Powerful price action combined with significant long-term resistance makes for a compelling case for lower prices. At least for now.

The situation in Ukraine is obviously very fluid and further panic could send oil higher, but in the very near-term (next few days) that looks unlikely. We are heading into the weekend, so carrying risk in oil is well, not without significant risks.

A scenario that would be ideal for those looking to take advantage of the exhaustion pattern, is to wait until oil takes out the spike-high at 116.57 by a small amount and then fails back through that high. A flush through the reversal day high and turn lower could offer up a good risk/reward entry for those looking to fade recent strength.

If we see a push through that high and no turn lower, then we should respect momentum until further indications suggest otherwise.

Crude Oil (CL1!) Daily Chart

WTI Crude Oil Chart by TradingView

Gasoline (RBOB) is trading at 2011/12 highs, with the 2008 record high just around the bend. It put in a sharp reversal yesterday, and is currently pushing back towards the high at 3.522. Watch for a reversal around this level, else the record high becomes the focus.

RBOB (RB1!) Daily Chart

gasoline futures daily chart

RBOB Chart by TradingView

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

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