Technical Analysis – WTI oil futures challenge crucial zone as advance resumes
April 13, 2023 7:25 am
WTI oil futures (May delivery) posted a fresh 15-month low of 64.36 in mid-March after breaking below their long-lasting rectangle pattern. However, the commodity bounced strongly and jumped above both its downward sloping channel and the 50-day simple moving average (SMA), while it is currently battling with a fortified area that includes the 200-day SMA and 38.2% Fibo.
The momentum indicators currently suggest that bullish forces are strengthening near their overbought territories. Specifically, the MACD histogram is gaining ground above both zero and its red signal line, while the RSI has flatlined slightly below the 70-overbought mark.
If buyers try to push the price even higher, they might initially struggle to conquer the 83.18 congested area that includes the 200-day SMA and the 38.2% Fibonacci retracement of the 6.62-130.5 uptrend. Surpassing that barrier, the price may ascend to test the November peak of 92.50. Further advances could cease at the 23.6% Fibo of 101.26.
On the flipside, should the price reverse lower, the recent support zone of 79.50 could act as the first line of defense. A break below that region could turn the spotlight to 75.80, which overlaps with the 50-day SMA. Even lower, the price could retreat towards 72.60 before the 50.0% Fibo of 68.56 gets tested.
In brief, WTI oil futures have been in a strong recovery after hitting a 15-month low and reaching extremely oversold conditions. However, for the medium-term picture to turn bullish, the price needs to close above the 83.18 ceiling.
WTI oil futures (May delivery) posted a fresh 15-month low of 64.36 in mid-March after breaking below their long-lasting rectangle pattern. However, the commodity bounced strongly and jumped above both its downward sloping channel and the 50-day simple moving average (SMA), while it is currently battling with a fortified area that includes the 200-day SMA and 38.2% Fibo.
The momentum indicators currently suggest that bullish forces are strengthening near their overbought territories. Specifically, the MACD histogram is gaining ground above both zero and its red signal line, while the RSI has flatlined slightly below the 70-overbought mark.
If buyers try to push the price even higher, they might initially struggle to conquer the 83.18 congested area that includes the 200-day SMA and the 38.2% Fibonacci retracement of the 6.62-130.5 uptrend. Surpassing that barrier, the price may ascend to test the November peak of 92.50. Further advances could cease at the 23.6% Fibo of 101.26.
On the flipside, should the price reverse lower, the recent support zone of 79.50 could act as the first line of defense. A break below that region could turn the spotlight to 75.80, which overlaps with the 50-day SMA. Even lower, the price could retreat towards 72.60 before the 50.0% Fibo of 68.56 gets tested.
In brief, WTI oil futures have been in a strong recovery after hitting a 15-month low and reaching extremely oversold conditions. However, for the medium-term picture to turn bullish, the price needs to close above the 83.18 ceiling.
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