WTI oil futures draw a bullish inverted head and shoulders pattern [Video]
|WTI oil futures (May delivery) appear to be forming an inverted head and shoulders pattern in the four-hour timeframe in a possible signal for a positive trend reversal. In the latest upturn, the price failed to overcome its previous high of 28.45 and reversed south to build the right shoulder.
The bullish cross between the 20- and 50-period simple moving averages (SMAs) is also encouraging for a trend improvement.
A decisive rebound above the 29.00 level, where the formation’s neckline is standing, could indicate the start of an uptrend, with traders increasing buying exposure probably towards the 200-period SMA and the 34.00 resistance area. Slightly higher, there is another obstacle around 36.66 that bulls need to successfully overcome to remain in charge.
That said, the momentum indicators are still in a depressing position, suggesting instead that an upside correction may come later than sooner. The RSI seems unable to jump above its 50 neutral mark, while the MACD continues to lose ground below its red signal line. Therefore, some caution may remain in the market, with the 50-period SMA at 23.32 probably grabbing immediate attention if the price further weakens. Below that, all eyes will turn to the left shoulder of 20.50, where any violation would resume fears of a downward trending market, pushing support back to the 19.26 bottom.
In short, the downtrend in WTI oil futures looks to be at risk as a progressing inverted head and shoulders pattern has appeared on the four-hour chart. Traders would wait for a confirmation above the 29.00 level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.