Are More Declines in Store for WTI?

WTI fell sharply yesterday, after hitting resistance at 74.50 on Friday. That said the slide was stopped at 70.80, and then, the price rebounded somewhat. Overall, with no clear trending structure on the 4-hour chart, we prefer for clear support or resistance breaks, before we start examining the forthcoming direction of WTI.

If the bears are willing to push the action below 70.80, this will confirm a forthcoming lower low and may open the path towards the 69.70 territory, marked as a support by the low of June 17^th. If they don’t stop there, a break lower could carry larger bearish implications, and perhaps see scope for extensions towards the 68.05 barrier, marked by the inside swing high of July 20^th.

Shifting attention to our short-term oscillators, we see that the RSI rebounded from slightly above 30, while the MACD remains below both its zero and trigger lines. Both indicators detect downside speed, but the fact that the RSI turned up make us careful of another possible bounce before the next leg south.

Now, we will start examining whether the bulls have gained full control, only if we see a break above the 74.50 resistance, marked by the high of July 30^th. This will confirm a forthcoming higher high on the 4-hour chart and may initially target the 75.50 zone, defined by the high of July 13^th. Another break, above 75.50, could encourage more advances, perhaps towards the peak of July 6^th, at around 77.00.

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