WTI crude oil recently broke through the resistance of its descending triangle pattern, signaling the possibility of a rally. This breakout suggests a potential price movement of around $9, which could propel the energy commodity toward the $79-$80 per barrel range.
Despite this positive technical signal, the 100-day Simple Moving Average (SMA) remains below the 200-day SMA, indicating that the broader trend still leans toward the downside. This positioning suggests that crude oil may face a pullback from current levels, although the narrowing gap between the SMAs points to a reduction in bearish momentum and a potential bullish crossover.
Should a retracement occur, WTI crude oil could find support at key technical levels, such as the 38.2% Fibonacci retracement, aligning with the broken triangle top near $69.60 per barrel. A deeper correction could see the price testing the 50% Fib at $69.00 or the 61.8% Fib at $68.42.
Momentum indicators also reflect mixed signals. Stochastic oscillators are already in overbought territory, indicating a possible exhaustion of buying pressure, and a move lower could reignite selling activity. However, the oscillator still has room to decline before reaching the oversold zone, suggesting that downward momentum could persist.
Similarly, the Relative Strength Index (RSI) has not yet entered overbought territory but is showing signs of turning lower, which could signal that sellers are starting to take control. A further correction could continue until the RSI reaches oversold conditions and begins to rise again.
Geopolitical tensions, particularly the ongoing conflict between Russia and Ukraine, could also play a significant role in influencing WTI prices. Any escalation could reignite concerns over production disruptions, potentially driving prices higher. On the flip side, easing tensions could prompt profit-taking following last week’s price surge, possibly leading to a deeper pullback.
The market will also be closely watching the upcoming API and EIA inventory reports. A significant increase in stockpiles could put additional pressure on crude prices, while a drawdown in inventory might provide the momentum needed to push prices higher and sustain the recent uptrend.
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