WTI Crude Price Daily Outlook: Will Symmetrical Triangle Traps Spark an Energy Breakout Past $98?

Quick overview

WTI crude oil (USOIL) is staging a fundamental, very aggressive reversal on Wednesday, up to 95.95, after a 2.44% intraday breakout expansion. The oil complex has rallied sharply back towards the upper end of a strong, multi-week pattern on the two-hour chart. This aggressive move higher is due to a collapse in Middle East diplomatic efforts, completely overcoming short-term macro demand concerns.

Today’s Catalyst

• Middle East Ceasefire Breakdown: The U.S.-Iran ceasefire has existed on a conditional basis for nine weeks, and it is about to face its biggest test yet. International shipping risk spiked when Iran shot a number of ballistic missiles at regional nations Kuwait and Bahrain (missiles missed their targets). The United States then retaliated with missile strikes against Iranian missile launchers on Qeshm Island. This exchange has brought the geopolitical risk premium back in a big way to oil prices.
• U.S.-Iran Peace Talks Stalled: There is no hope right now for a quick re-opening of the Strait of Hormuz, according to the strategic framework agreed to in July between the U.S. and Iran. Top commodity analysts state that negotiations between Washington and Tehran are in limbo. Moreover, Iranian mines throughout the channel mean that even if shipping returns, it will take a while to re-establish.
• IEA Low Stocks Alert: Global physical oil stocks are expected to drop significantly, according to the International Energy Agency (IEA), which said they could fall below critical levels if inventory draw continues in the coming weeks, before the summer driving season peaks. This would mean that the oil market would remain in deep backwardation for the foreseeable future.

Technical Picture

The two-hour chart shows a perfect, ending symmetrical triangle formation (C-D). WTI crude is completing a tight range coil that erased the daily downtrend that it suffered earlier in the day, with aggressive buyers absorbing the price as it rose back up to a rising, lower trendline (shown in green).

The price now is in a parabolic advance, blowing through the intermediate resistance to the current 95.95 region. Long lower wicks on the 94.38 to 94.75 support area suggest buyers are well present, and there are more upside to go in a bullish breakout setup. The 14-period relative strength index (RSI) has bounced to a neutral-bullish 64.43. A breakdown above the top of the triangle opens the door to a high-volatility 8 to 10 price expansion.

• Resistance: 96.43 (immediate breakout support), 98.68 (triangle upper boundary), 102.72 (major swing high)
• Support: 94.75 (triangle immediate support level), 94.38 (triangle support area), 92.40 (swing low)

Trade Idea

Price is sitting at a key resistance level, so there is high probability of a strong breakout here:

• Entry: Long Buy Stop, above 96.43 on two-hour candle close.
• Targets: 98.68 (T1), 102.72 (T2).
• Stop: 94.38.

Summary

This short-term WTI crude oil forecast is very bullish, showing that we’re near a high-confidence setup in the oil complex before the Wednesday inventory numbers are released. Although U.S. production is at an all-time high, which should keep a cushion around North American supplies in the coming weeks, the collapse of the ceasefire with Iran and falling global crude inventory could create very powerful upward momentum. Traders should stay away from overbought oscillators and use shallow intraday retracements down near the 94.50 region as a springboard for entry.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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