WTI crude oil is currently navigating its way within a clearly defined channel on the short-term charts, hinting at the possibility of yet another correction emerging soon. But what does this mean for the trend we’re following? Let’s delve into key points on the hourly chart to uncover potential shifts.
In our Global Market Weekly Recap, we’ve observed how crude oil prices have been pressured downward. This slide was triggered by OPEC+’s confirmation to proceed with their planned production hikes, despite prevailing uncertainties associated with tariffs. Additional pressure came from worries about weakening demand from China, compounded by the country’s retaliatory measures in response to increased U.S. trade tariffs. These factors have buoyed safe-haven assets like the U.S. dollar while weighing heavily on the oil market.
Are we on the brink of further declines for crude oil? It’s crucial to remember that market prices are often swayed by underlying fundamentals. If you’re yet to dig into the latest developments concerning WTI crude oil and the U.S. dollar, then now’s the time to consult the economic calendar and keep abreast of daily fundamental news.
Examining the chart, you’ll notice WTI crude oil’s pattern of forming lower highs and lower lows within a descending channel, which has held its form for several weeks. It appears that prices have bounced off a support level and might soon test resistance at the top of the channel again.
The Fibonacci retracement tool highlights that the channel’s resistance aligns closely with a pivotal point at $72.18 per barrel and the 61.8% Fibonacci retracement level. This area is also near the 200 SMA, which serves as a dynamic point of inflection. The 100 SMA continues to rest below the 200 SMA, suggesting that bearish forces are prevailing. Should the Fib levels manage to cap gains, we might witness the commodity price retreating to support around $70.31 per barrel, or potentially dipping towards the channel’s lower boundary, just above $69.23 per barrel at S1.
Conversely, a successful break above the channel could signal the onset of a bullish turnaround, initially targeting R1 at $73.92 per barrel, and potentially extending to R2 at $76.88 per barrel.
Remember to stay vigilant regarding this week’s major news events and updates that could sway market sentiment, as these will be critical when making any trading decisions.
