Technical Analysis – WTI oil futures resume slide, return focus to the downside

Anthony Charalambous, XM Investment Research Desk

WTI oil futures are looking increasingly bearish after slipping below the 50-period simple moving average (SMA). The short-term oscillators are turning negative. The RSI is accelerating the negative momentum, falling further below the neutral mark. The MACD is also pointing to negative pressures, dipping below the zero line. However, the SMAs reflect mixed signals and thus could yet manage to confine the price within a sideways market.

To the upside, buyers have a tougher task in hand, as they would need to surpass the 50- and 20-period SMAs as well as the 53.87 resistance, which is the 23.6% Fibonacci retracement of the down leg from 63.22 to 50.98. If they’re also able to overtake the 100-period SMA at 54.55, the near swing high of 54.90 is next to obstruct the push higher. Further north, the 200-period SMA could apply stronger downside pressure.

Having pushed the price below the 50-period SMA, the bears are now targeting the swing low of 51.37 ahead of the neighboring trough of 50.98. Further down, the August low of 50.51 could challenge the sellers, and if breached could put the medium-term neutral bias into question, turning the focus to the November 2018 low of 49.39.

In brief, the precious commodity in the short-term is limited between 50.98 and 54.90. Therefore, a break below or above would expose the directional bias.