Oil Price Forecast: WTI bears remain in the hunt for 200-day MA
US oil closed posted gains on Friday but is not out of the woods yet, according to technical charts. At press time, the front-month contract is changing hands at $67.50/barrel.
Daily chart
As the above chart shows, oil prices found acceptance below the channel support on Wednesday, signaling a resumption of the downtrend from the July 3 high of $75.24.
It may appear as though Friday's gains have neutralized the immediate bearish outlook put forward by the channel breakdown. However, that is not the case as oil price established lower highs and lower lows pattern last weeks and hence the emboldened bears are seen losing the grip only if prices violate the lower highs pattern (move above the newly established falling channel hurdle).
What's more, the downward sloping 5-day and 10-day moving average (MAs) are also indicating a short-term bearish setup. Further, oil is trading below 50-day MA and 100-day MA.
As a result, oil is more likely to fall back below Friday's low of $66.18 and extend losses towards the 200-day MA over the next few days. The long-term MA is currently located at $64.49.
A move above the falling channel hurdle would abort the bearish view. A daily close above $70.41 (July 30 high) would confirm a bear-to-bull trend change.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
