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Technical Analysis – Is it the calm before the storm for WTI oil futures?



  • WTI oil futures hold near recent lows; develop within narrow neutral structure

  • Technical signals indicate improving sentiment, but downside risks could emerge near 80.80

Despite occasional drops, WTI oil futures remained squeezed within the 78.00-80.00 area and between two ascending lines for the second consecutive week.

The bulls have been held back around 79.68 by the 38.2% Fibonacci retracement of the December-April uptrend, while the 200-day exponential moving average (EMA) has been restrictive too.

Thus, in spite of the upward trend shown by the technical indicators, the price must conclusively exceed that boundary around 79.68 and, more significantly, breach the resistance line at 80.80 to enhance buying desire, aiming for the 23.6% Fibonacci mark of 82.45. Even higher, there is a possibility that the price will briefly stall around 84.00 before continuing its upward movement to 85.70.

Note that the 20-day EMA has slipped below the 50-day EMA, making a bearish trend continuation likely.

For the sellers to come into force, the price must crack the protective trendline at 78.63 and perhaps slide below the 50% Fibonacci number of 77.44 too. Should that materialize, the decline could pick up pace, bringing the 61.8% Fibonacci and the support line from April at 75.61 under the spotlight. If more losses occur, the price might initially pause near the 73.60 zone and then around the 78.6% Fibonacci of 72.00.

In a nutshell, WTI oil futures are presently trading within a compact neutral region. Depending on whether the market closes above 80.80 or below 78.73, the market may move accordingly.

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