Technical Analysis – WTI oil futures on a slippery slope again
April 21, 2023 11:54 am
WTI oil futures returned to losses after a whopping continuous 24% rally during the previous four weeks, which lifted the price up to an almost five-month high of 83.37.
Disappointingly, the price has reversed its bullish channel breakout and is currently at risk of another bearish correction beneath the 77.00 number and its 20- and 50-day exponential moving averages (EMAs).
The technical indicators are showing warning signs. Specifically, the RSI has stepped into the bearish area below 50 and the MACD is decelerating below its red signal line, flagging more price weakness ahead. Meanwhile, the negative trajectory in the Stochastic oscillator is favoring the bears as well, though the indicator has already entered the oversold region below 20, suggesting the sell-off may soon find support.
If the bearish scenario materializes, with the price closing below the 77.00mark, the 75.00 psychological mark may immediately come to the rescue. Otherwise, the decline may intensify towards the key 73.00 region, which is the base of the broad range. Additional losses from here could take a breather somewhere between 70.00 and 68.35, with the latter representing the 50% Fibonacci retracement number of the 2020-2022 uptrend.
On the upside, a step above the 50-day EMA and the 23.6% Fibonacci retracement of the 120.87-64.36 downtrend at 77.35 would shift the focus back to the 79.60-81.60 region formed by the channel’s upper boundary and the 200-day EMA. Yet, only a decisive extension above the crucial 83.00 resistance area, which has been keeping the market in a flat trajectory since the end of December, would bring the bullish outlook back into play. If that happens, the price may advance towards the 86.00 barrier, while higher, the 88.60 zone could be the next hurdle.
To sum up, WTI oil futures may experience more selling in the coming sessions if the price closes below 77.00, with support likely emerging around 75.00. For the bulls to take charge, the market needs a sustainable recovery above the 83.00 ceiling.
WTI oil futures returned to losses after a whopping continuous 24% rally during the previous four weeks, which lifted the price up to an almost five-month high of 83.37.
Disappointingly, the price has reversed its bullish channel breakout and is currently at risk of another bearish correction beneath the 77.00 number and its 20- and 50-day exponential moving averages (EMAs).
The technical indicators are showing warning signs. Specifically, the RSI has stepped into the bearish area below 50 and the MACD is decelerating below its red signal line, flagging more price weakness ahead. Meanwhile, the negative trajectory in the Stochastic oscillator is favoring the bears as well, though the indicator has already entered the oversold region below 20, suggesting the sell-off may soon find support.
If the bearish scenario materializes, with the price closing below the 77.00 mark, the 75.00 psychological mark may immediately come to the rescue. Otherwise, the decline may intensify towards the key 73.00 region, which is the base of the broad range. Additional losses from here could take a breather somewhere between 70.00 and 68.35, with the latter representing the 50% Fibonacci retracement number of the 2020-2022 uptrend.
On the upside, a step above the 50-day EMA and the 23.6% Fibonacci retracement of the 120.87-64.36 downtrend at 77.35 would shift the focus back to the 79.60-81.60 region formed by the channel’s upper boundary and the 200-day EMA. Yet, only a decisive extension above the crucial 83.00 resistance area, which has been keeping the market in a flat trajectory since the end of December, would bring the bullish outlook back into play. If that happens, the price may advance towards the 86.00 barrier, while higher, the 88.60 zone could be the next hurdle.
To sum up, WTI oil futures may experience more selling in the coming sessions if the price closes below 77.00, with support likely emerging around 75.00. For the bulls to take charge, the market needs a sustainable recovery above the 83.00 ceiling.
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