WTI oil futures power up to 70 but some caution remains [Video]

WTI oil futures (September delivery) bounced forcefully near the critical resistance-turned-support zone of 66.65 late on Wednesday, quickly recouping most of Monday’s losses to trade back above the 70.00 level.

The sprint saved the marked from an outlook deterioration in the medium-term picture, but in the short-term window, the price is still structurally in a bearish corrective mode below the 76.20 peak.

As regards the price momentum, although the upside reversal in the Stochastics is promoting further recovery in the market, some negative risks continue to linger in the background as the RSI has yet to pierce above its 50 neutral mark despite the latest sharp upturn in the price. The MACD could not strengthen above its zero and signal lines either, suggesting that bearish interest is still intact.

The 50-day simple moving average (SMA) and the blue Kijun-sen line are currently capping upside movements within the 70.00 - 70.60 area. Hence, once they give way, the door would open for the 72.00 mark and the 20-day SMA slightly higher. Additional gains from here may test the 74.60 resistance territory before stretching towards the 76.20 peak and the 2018 top of 76.87.

If selling pressures return, the bears may attempt to breach the 66.65 floor and drive towards the bottom of the Ichimoku cloud seen at 65.00. A step lower could feed a sharper decline towards 63.60, while below that, the focus will shift to May’s low of 61.54.

In brief, WTI oil futures remain exposed to negative corrections despite Wednesday’s rally. A sustainable move above 70.00 could encourage more buying, while a drop below 66.65 may activate fresh selling orders.