WTI crude oil futures have traded lower in the prior three days following the pullback on the fresh three-year high of 64.80. When looking at the bigger picture the price is endorsing the scenario for further gains, however, in the short-term timeframe a bearish correction is possible.
The price slipped below the 161.8% Fibonacci retracement level at 63.65 of the last big downward movement with the high at 55.40 and the low at 42.00. If price action remains below 63.65, there is scope to test the 62.18 support level, which holds slightly above the 20-day simple moving average. Falling below it would see prices re-test the 59.00 handle and then below there would be a touch near the 58.50 support level.
In case of a run above the 161.8% Fibonacci mark, then the focus would shift again to the upside towards the 3-year high of 64.80. Moreover, if the latter level breached, this would increase upside pressure and extend the gains towards the next level of 68.00 taken from the low of December 2009.
In the daily timeframe, momentum indicators are confirming the recent bearish correction. The Relative Strength Index (RSI) is falling after the bounce off the overbought zone, whilst the MACD oscillator is weakening and dropped beneath its trigger line, creating a bearish crossover in the prior sessions. As a side note, the price has been developing in an ascending move since June 2016.
