WTI oil prices staged a strong rally from the August lows of $40 a barrel to rise to a high of $49.34 on August 19. The market became overextended at these levels as shown by technical indicators. RSI reached overbought levels at 70 and the stochastic also reached extreme levels. So following from this, prices reversed back down to find support at $46.41.
The short term bullish trend can be maintained if the market remains above its 50-day moving average which coincide with the 38.2% Fibonacci retracement level (of uptrend from $40-$49.34). This support level lies around $45.80. A break below the 50% Fibonacci ($44.68) would start to shift the short term bullish trend.
Alternatively, a bounce from current level would open the way for prices to retest the $49.34 high. A resumption of upside momentum if RSI rises would help the market higher.
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