Technical Analysis – WTI oil futures ease volatility within symmetrical triangle

Christina Parthenidou, XM Investment Research Desk

WTI oil futures for October delivery saw volatility drying up within the boundaries of a symmetrical triangle over the past four months.

Any breakout at the lines of the triangle could determine the directional bias, though since the RSI and the MACD keep fluctuating around neutral levels, the current consolidation phase is likely to continue for now.

A remarkable move above the downward resistance line and more importantly above the 50% Fibonacci of 59.81 of the downleg from 76.87 to 42.53 could add more sparkle to the rally, shifting attention towards the 61.8% Fibonacci of 63.84. Running higher, the bulls would push harder to clear the 66.57 top and signal that the rally started from 42.53 is back in play.

Alternatively, a cross under the support line and the recent lows around 52.82 could see a retest of a stronger barrier around the 23.6% Fibonacci of 50.87. Should the bears beat that wall, a steeper sell-off could follow until the 47.00 number. Such a move would also change the neutral medium-term picture into a bearish one.

In brief, WTI oil futures could maintain the sideways move in the short-term to fulfill the symmetrical triangle. The medium-term outlook is also expected to stay neutral unless the price falls below 50.87 in which case the market would resume a bearish profile.