WTI oil futures have been trading around the pivotal 47- level and keeping within a range between 45.40 and 50.40 since July.

Trading during the last few sessions has been very choppy. The recent rally from the 45-area to the September 6 high of 49.39 fizzled out after the market became overbought as was indicated by the RSI rising above 70 on the 4-hour chart. A subsequent drop found strong support at 47 from where prices bounced off.

Near-term risk is tilted to the downside based on bearish signals from technical indicators. The 20-period moving average is pointing down while momentum oscillators RSI and MACD are now in their respective bearish territory.

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Should key support at 47 breaks down, this would increase downside pressure for a move towards the August 31 low of 45.56. A further extension lower would see WTI push outside the broader range and begin to shift out of the neutral phase to a more bearish one and turn the focus to the 42-level.

The odds for a push higher from current levels in the near term have diminished based on the reversal of the 20-period SMA and of the momentum oscillators. A rise above yesterday’s high of 48.24 would signal more upside potential with scope to reach the September 6 high of 49.39. From here, the key 50 level comes into view.

Only a move above the August 1 high of 50.40 would push prices out of the 6-week range. Then the short-term trend would shift to bullish. For now, the near-term bias is bearish while the medium-term is neutral.


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