After Tuesday’s strong sell off, WTI oil managed to recover some of its losses and pushed higher, away from the newly found support near the 52.80-dollar price tag. There is a chance to see a bit more recovery, but one should remember that the commodity is still below its short-term downside resistance line, drawn from the high of the 10th of October. This means that as long as that line remains intact, any move higher could be just classed as a correction.
If WTI oil decides to make a run for it and breaks above the 54.90 resistance area, this could be a positive indication that the “black gold” may continue its recovery at least for a little bit more. The next potential resistance zone, which might get tested could be at the 56.00 hurdle, marked by yesterday’s high. If that zone is not able to withhold the price down, this is where more bulls may get excited about the potential opportunity to drive the commodity upwards to test the 58.15 resistance barrier, marked by the high of the 16th of November. At the same time, WTI oil would be testing the aforementioned downside resistance line, which could stall the price for a while.
Our oscillators, the RSI and the MACD are somewhat in support of the above-discussed idea. The RSI has shifted away from its oversold territory and is aiming now for the 50 line by pointing higher. The MACD has also bottomed and moved higher, and at the same time is now sitting above its trigger line. Both indicators are also showing a negative divergence on the 4-hour chart, which supports the notion of a potential recovery, at least for now.
On the downside, a drop below this week’s low of 52.80 would confirm a forthcoming lower low and could open the way towards levels, last seen in October 2017. The first good potential support area to watch out for could be the 51.55 obstacle, a break of which may clear the path to the 50.45 area, marked by the low of the 12th of October last year.
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