Yesterday’s drop in WTI crude oil led towards a test of its long-term upside support line, taken from the low of the 21st of June last year. As long as that line remains intact, we will class the current move lower as a correction, before the commodity could resume its move higher again. We can also see that the “black gold” is trading below the short-term downside resistance line, which could easily be broken, due to the fact that the long-term support line carries more weight. Nevertheless, even though we are leaning more to the bullish side, we should still be very careful and wait for a clear move from WTI.
For now, we will observe the price action with caution, but still remain somewhat positive over the near-term outlook. A good bounce from the aforementioned upside line could lead to a test and a break of the downside resistance line, which could then open the way to the 67.80 level, marked by the Tuesday’s high. If that level does not hold, we could see more bulls joining in the action, in order to try and lift the price higher. This could be a good confirmation of a potential upside scenario. The next potential area of resistance could be seen near the 69.90 hurdle, which was the high of the 30th of July. Further acceleration in the price could open the path to the 73.90 zone, marked by the highest point in July.
On the downside, if the aforementioned long-term upwards moving support line gets broken and we see WTI crude closing below the 64.00 level, we could start examining lower support areas like the 61.80 barrier, which could be the first one on our radar. That barrier acted as good support on the 6th of April. A drop below that could open the way for a test of the psychological 60.00 mark, which held the price from moving lower from the 1st until the 14th of March. If that area does not prove strong enough to stop the bears, then a move below 60.00 could set the stage for a test of the 58.10 hurdle, marked by the lowest point of February.
Our oscillators, the RSI and the MACD, are still sitting in the negative zone. The RSI is below its 50 line and the MACD is both, below the zero and trigger lines. All this makes us somewhat cautious, but as long as the long-term upside support line remains intact, we prefer to stay cautiously positive.
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