CRUDE OIL TECHNICAL OUTLOOK – BEARISH
Crude oil’s slide may have slowed in recent months but hasn’t altered the broader downward pressure.
The break in August triggered a double top pattern (the 2022 highs), pointing to a drop toward the 200-week moving average (now at about 66.00), the price objective of the pattern. Since then, crude oil has been guided lower in a slightly downward-sloping channel, characterized by lower-highs-lower-lows.
Crude Oil Weekly Chart
Even though oil hasn’t made a fresh low since December, the weak structure remains intact. For the downward pressure to fade, at minimum, crude oil needs to break above the upper edge of the declining channel (now at about 87.70). Moreover, the brief rallies since late 2022 have lacked any meaningful upward momentum, as the 14-week Relative Strength Index shows. The RSI has stayed under 50, indicating a bias toward the downside.
Crude Oil Monthly Chart
Furthermore, downward momentum on the monthly charts remains firmly in place, raising the risk of some more weakness in oil in the interim. Beyond the short-term, the big picture for oil continues to stay bullish while it says above the end-2021 low of 62.50 is a vital support.
Despite the softness since last year, the Moving Average Convergence Divergence indicator (MACD) stays above zero on the monthly chart – a sign of strength. Having said that, the bearish crossover by the MACD last year confirms that the medium-term upward pressure has faded (but not reversed). Bearish crossovers in the positive territory are a sign that bullishness is easing, but not bearish, and vice versa.