WTI Oil futures trade within a bearish rectangle [Video]
|WTI oil futures have been trading within a rectangle since their downtrend stalled at a one-year low of 71.75 in December, unable to make any headway either way.
Although the floor around 73.35 is creating speculation that sellers are losing power, there is barely any convincing sign that the market is transitioning from a downtrend to an uptrend. The price has yet to mark a new higher high above the tough ceiling around 83.00, which coincides with the 38.2% Fibonacci retracement of the 2020-2021 upleg. Moreover, the death cross between the 50- and 200-day exponential moving averages (EMAs) keeps endorsing the broad negative direction in the market. Overall, rectangles are considered a continuation pattern, displaying a pause in the current bearish trend with the expectation that it will eventually resume.
Hence, a decisive close below the 73.35 base is expected to stretch the downtrend aggressively towards the 70.00-68.35 region, which encapsulates the 50% Fibonacci level. If the bears claim that area too, the next stop could occur around the support line drawn from March seen near 65.00.
In the meantime, the 78.00 handle is adding a strong footing under the price. If that persists, the bulls may re-challenge the wall at 83.00-84.70, where the 200-day EMA and the tentative resistance line from August are placed. A successful break higher could last till the 88.60 area, while a continuation above November’s peak of 92.50 would confirm a bullish trend reversal.
In a nutshell, the horizontal move in WTI oil futures has not eliminated selling interest yet. For that to happen, the price will need to bounce forcefully above the 83.00-84.70 zone.
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