WTI oil futures (May delivery) broke below their rectangle pattern, which held strong since late November, posting a fresh 15-month low of 64.36. Even though the commodity managed to recoup some losses, its technical picture remains bearish. 

 

The momentum indicators currently suggest that buying forces are strengthening but have not taken control yet. Specifically, the stochastic oscillator is ascending near its 80-overbought zone after escaping oversold conditions, while the MACD histogram is gaining ground but still below both zero and its red signal line.

If the recent rebound resumes, the price could initially challenge the recent support of 72.60, which could act as resistance in the future. Breaking above that zone, the commodity could ascend towards 83.18, which is the 38.2% Fibonacci retracement of the 6.62-130.5 uptrend that extended from the pandemic lows till the 13-year high in March 2022. Even higher, further upside moves could cease at the November high of 92.50.

Oil

On the flipside, should the negative momentum intensify and the price reverses lower again, the 50.0% Fibo of 68.56 could act as the first line of defense. A violation of that territory may open the door for the 15-month low of 64.36. Failing to halt there, the price could descend to test the 61.8% Fibo of 53.94.

In brief, WTI oil futures posted a minor rebound after plummeting to a fresh 15-month low and reaching oversold conditions. For the bearish outlook to reverse, the price needs to jump above the 83.18 ceiling.

Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.

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