Oil Price Analysis: Break of the triangle pattern could take WTI to a new 17 week high

WTI 4-hour chart

WTI has been pushing higher on Tuesday after an EIA report stated that US output is to fall by 600K barrels per day (bpd) and global oil demand could see an increase of 190K bpd. The price had recently struggled to break and hold above USD 40 per barrel but since cracking the zone again overnight it has been used as a support area.

Looking at the chart, the key feature is the black triangle pattern. A break to the upside could indicate a new 17 week high could be in the making. The US COVID-19 case count has failed to deter traders at the moment as supply issues are at the forefront of their minds. 

If the level does happen to break the next resistance is at the previous near term high of USD 41.50 per barrel. On the downside, the pattern support could stem any losses but if the pattern does manage to crack then the blue level could be a target for the bears. Beyond that, the green support level just under USD 35 per barrel is next up.

On the indicators, the MACD is showing a mixed picture as the histogram is red but the signal lines are above the mid-point. The histogram does, in fact, look like it will cross back above the zero level at any point though. The Relative Strength Index indicator is still looking positive as it is above the 50 line and still has some space for some upside movement. Lastly, today traders will get the latest API inventory data at 9.30 pm London time, last time out there was a large draw of 8.156mln barrels so keep an eye if the trend continues. 

Additional levels