WTI technical analysis: Fades spike to $55.50, eyes bigger drop on bear flag breakdown

WTI's hourly chart is reporting an inverted flag breakdown.
That bearish continuation pattern indicates an end of the corrective bounce from Thursday's low of $53.58.

Omkar Godbole FXStreet Contributor

WTI oil is currently trading at $55.10 per barrel, having hit a high of $55.52 earlier today.

The pullback could be associated with the drop in China's Yuan and the resulting risk aversion in the financial markets. At press time, the futures on the S&P 500 are down 1%.

The black gold could see a deeper drop during the day ahead, as the hourly chart is reporting a flag breakdown, a continuation pattern, which often accelerates the preceding bearish move.

The pattern has opened the doors to a retest of the recent low of $53.58. On the lower, prices may find support at a higher low of $54.67 created on Friday.

The bearish case would be invalidated if prices break above $55.50, which looks unlikely.

Hourly chart

Trend: Bearish

Pivot points

1. R3 58.1
2. R2 57.09
3. R1 56.19
PP 55.18
1. S1 54.28
2. S2 53.27
3. S3 52.37

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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