WTI Price Analysis: Bulls remain on the defensive below 50-DMA/descending trend-line confluence

WTI Crude Oil prices face rejection near the 50-DMA and drift lower on Wednesday.
The formation of a descending triangle on the daily chart favours bearish traders.
A sustained strength beyond the $72.00 mark is needed to negate the negative bias.

Haresh Menghani FXStreet

Western Texas Intermediate (WTI) Crude Oil prices come under renewed selling pressure on Wednesday and reverse a major part of the previous day's positive move. The intraday downfall picks up pace during the early part of the European session and drags the commodity to a fresh daily low, around the $70.25 region in the last hour.

Worries that a global economic slowdown will dent fuel demand overshadow expectations for tighter supply due to output cuts announced by top exporters - Saudi Arabia and Russia - and act as a headwind for Crude Oil prices. Apart from this, a modest US Dollar (USD) strength is seen as another factor weighing on the black liquid. Traders now look to a meeting of oil industry executives with energy ministers from OPEC and its allies. Apart from this, the FOMC meeting minutes should provide some meaningful impetus and contribute to producing short-term trading opportunities.

From a technical perspective, the recent recovery from strong horizontal support near the $67.00 mark fails to find acceptance above the 50-day Simple Moving Average (SMA) and fails near a downward-sloping trend-line extending from late May. The price action, meanwhile, constitutes the formation of a descending triangle on the daily chart and favours bearish traders. That said, oscillators on the daily chart are yet to confirm a negative outlook. This makes it prudent to wait for a sustained break below the $67.00 support before positioning for any further losses.

In the meantime, any subsequent downfall is more likely to find some support near the $70.00 psychological mark ahead of the $69.60 area. The next relevant support is pegged near the $69.00 mark, below which Oil prices could drop to the $68.25-$68.20 region en route to the $67.60 zone and the $67.00 strong horizontal support. A convincing break below the latter will confirm a bearish breakdown through the triangle support and make the black liquid vulnerable to sliding further.

On the flip side, the 50-day SMA, currently around the $71.20-$71.30 area, might continue to act as an immediate barrier ahead of the $72.00 mark, or the descending trend-line. A sustained strength beyond will negate the bearish outlook and shift the bias in favour of bullish traders. WTI Crude Oil price might then surpass an intermediate hurdle near the mid-$72.00 mark and aim to reclaim the $73.00 mark. The momentum could get extended further beyond the $74.00 round figure, towards testing the June monthly swing high, around the $74.35 region.

WTI daily chart

Key levels to watch

WTI US OIL

Overview
Today last price	70.71
Today Daily Change	-0.61
Today Daily Change %	-0.86
Today daily open	71.32

Trends
Daily SMA20	70.24
Daily SMA50	71.3
Daily SMA100	73.82
Daily SMA200	77.35

Levels
Previous Daily High	71.42
Previous Daily Low	69.98
Previous Weekly High	71.11
Previous Weekly Low	67.14
Previous Monthly High	74.36
Previous Monthly Low	66.95
Daily Fibonacci 38.2%	70.87
Daily Fibonacci 61.8%	70.53
Daily Pivot Point S1	70.39
Daily Pivot Point S2	69.46
Daily Pivot Point S3	68.95
Daily Pivot Point R1	71.83
Daily Pivot Point R2	72.34
Daily Pivot Point R3	73.27

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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