WTI OIL Outlook: Recovery may be paused for deeper pullback

Slobodan Drvenica Windsor Brokers

US CRUDE OIL

WTI oil holds in red for the second straight day, with fresh weakness on Monday being boosted by weaker than expected China's export/import data.
Friday's bearish outside day was initial signal of reversal after strong recovery rally from new multi-month low at $42.36 showed signs of stall on approach to falling thick daily cloud (action was capped by falling 55SMA).
Slow stochastic reversed from overbought territory, while momentum and slow stochastic are turning south and adding to negative near-term outlook.
Correction comes after strong recovery in past two weeks when oil price advanced around 14% but failed to close above cracked 200WMA ($52.28).
Current action could be seen as positioning for fresh recovery and eventual attack at daily cloud base ($55.08), as improved sentiment in oil market sets scope for further advance. Psychological $50 level marks solid support, with extended dips to find support at $49.25 (converged 10/30SMA's) to keep bullish bias. Conversely, break here would weaken the structure, with extension below $47.88 (20SMA / 50% of $42.36/$53.29 recovery leg) needed to confirm reversal.

Res: 51.30; 52.28; 53.21; 54.54
Sup: 50.00; 49.25; 49.11; 48.28

Interested in Oil technicals? Check out the key levels

1. R3 51.96
2. R2 51.96
3. R1 51.96
PP 51.96
1. S1 51.96
2. S2 51.96
3. S3 51.96

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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