What the charts say about oil's next move, according to Carter Worth

WTI crude oil has risen from $55 to $77 per barrel, a 40% increase, and is now testing a 12-month downtrend line. CNBC Pro contributors suggest that investors currently long on oil should consider taking profits or hedging, while those looking to short may find this level attractive.

Analysis

WTI crude oil has demonstrated a substantial price increase, rallying 40% from $55 to $77 per barrel. This surge has positioned WTI precisely at its 12-month downtrend line, a critical technical level indicative of potential overhead supply and resistance. The "news-related spike" has brought oil to what is described as a "difficult level," and the associated market sentiment is moderately negative with a bearish tone, aligning with the technical outlook that suggests caution for further appreciation.

Key Decisions for Investors

• Investors with existing long positions in WTI crude oil should consider realizing profits or employing protective measures, such as selling call options, as the price has reached a significant technical resistance.
• Traders with a mandate for short selling could evaluate the current $77 per barrel level, which coincides with the 12-month downtrend line, as a potential entry point for short positions.
• All market participants should closely observe WTI crude's reaction to this critical downtrend line, as a sustained break above or a clear rejection could signal the next significant directional move for the commodity.