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.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.