WTI crude oil has breached key support levels in its descending triangle pattern, suggesting a potential downturn equivalent to the pattern’s height, spanning approximately $3 from $81 to $84 per barrel.
Technical indicators reinforce the bearish sentiment, with the 100-day Simple Moving Average (SMA) positioned below the 200-day SMA, indicating a downward bias. Despite a recent low around $78.60 per barrel, signs of oversold conditions from the Stochastic and bottoming out on the Relative Strength Index (RSI) suggest a possible rebound as buyers might step in.
Resistance levels at the 38.2% and 50% Fibonacci retracement levels of $80.25 and $80.75 per barrel, respectively, coincide with former support zones and SMA inflection points. A crucial level to watch for corrective action stands at the 61.8% Fib at $81.27 per barrel or the 200-day SMA.
Market sentiment remains sensitive to economic developments, including recent interest rate cuts by China’s central bank aimed at stimulating economic activity. Despite these measures, concerns over a strong dollar and global supply chain disruptions from a recent IT outage are dampening investor confidence, potentially limiting crude oil demand in the near term.
WTI crude oil prices are likely to continue reacting to upcoming inventory reports from the API and EIA, with market participants closely monitoring economic indicators and geopolitical developments for further cues.
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