WTI surged last Wednesday, breaking above the key resistance zone of 58.00, which also acted as the upper bound of the sideways range that was containing most of the price action since February 15th. Although this paints a positive short-term picture in our view, following the break, the price has been trading in a consolidative manner below the 59.20 hurdle. Thus, we would like to see a clear break above 59.20 before we get confident on larger upside extensions.
Such a break would confirm a forthcoming higher high on the 4-hour chart and may initially pave the way for the psychological round number of 60.00. If the bulls are not willing to give up near that zone either, its break may carry larger bullish implications, perhaps opening the path towards the 61.45 zone, which acted as a decent resistance back on November 12th.
Shifting attention to our short-term momentum studies, we see that the RSI ticked up from above its equilibrium 50 line, but the MACD, although still positive, runs below its trigger line and points down. Both indicators detect somewhat positive momentum, but the fact that the MACD is still below its trigger line makes us cautious that another setback maybe in the works soon, perhaps for another test near the 58.00 line as a support.
Now in case the 58.00 barrier fails to hold, its break could signal the black liquid’s return within the above-discussed range. This could turn the near-term outlook back to flat and may allow some more declines within the range. The next support in line may be the 57.15 zone, the break of which may see scope for extensions towards the 55.75 area, or the range’s lower end, at around 55.15.
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