WTI oil futures collapsed to a 15-month low of 65.68 on Wednesday after breaking the four-month-old range below the 72.65 floor.
The price, however, managed to close around the 50% Fibonacci retracement of the 2020-2021 rally at 68.35, increasing the odds for an upside correction or some stabilization as the RSI and the Stochastic oscillator hover near oversold levels. Yet, the decline in the indicators has not ceased yet, suggesting the downside pressures may dominate for a bit longer before the market switches to recovery mode. Meanwhile, the negative slope in the 20- and 50-day exponential moving averages (EMAs) is promoting the resumption of the bearish trend.
Should the price close below the 68.35 base, the sell-off could speed up towards the lower boundary of the bearish channel seen around 61.80. A continuation lower could halt near the March 2021 floor of 57.30, while a steeper decline could reach the former resistance of 53.80.
Alternatively, a bullish correction could initially pause near the 70.00 psychological mark, where the price almost bottomed in December. A successful move higher may attempt to re-enter the previous range above 72.65, with the 20- and 50-day EMAs likely coming next on the radar ahead of the key 80.75 bar.
In brief, the short-term bias for WTI oil futures points to more downside, though with the market trading within oversold waters, the ongoing sell-off might be nearing a bottom.
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