Are We Awake a Excellent For Crude Oil

Are We Awake a Excellent For Crude Oil

Crude prices have been on the rise over the past fortnight, as fears over rising US output were overshadowed by the continued respect of planned production cuts throughout much of the OPEC/non-OPEC nations. However, from a technical point of view, there is reason to believe we could be seeing the market falter in its ascent, paving the way for a period of weakness.Taking a look at the longer term picture, it is clear that the rally we have been seeing over the past 14 months looks like a retracement of the $62.56-27.58 descent. With that in mind, it is interesting to see the 76.4% being respected over recent months. This weekly chart highlights the rising wedge pattern being formed over the past year. This is typically bearish, thus pointing towards the eventual breakout coming to the downside. Crucially, while we have been creating higher highs over the past year, we have seen the price move into the region of trendline resistance.The four-hour chart is crucial here, with the price having broken through trendline support last week. That acted as a precursor to the move we are seeing this morning, where the price has dropped below the $53.00 support level. That completes a short term head and shoulders formation, pointing towards further downside to come. With that in mind, there is a good chance we will see crude prices tumble in the coming days.The key thing to note here is that if this is really a top for WTI, then the fact that it is happening at a lower high (on weekly timeframe) could be a hugely significant thing. With the wider weekly wedge pointing towards an eventual fall out of this pattern, a failure to create a new high means we could be seeing that eventual move come to fruition. Obviously this is somewhat a leap into the dark given what early stages we are at right now. However, the long term picture has to come back into play soon and there is reason to believe that the weakness we expect to see over the coming days could have an impact on the wider picture.