WTI oil futures for September delivery have recovered some ground in recent days, but the broader picture remains cautiously negative from a technical standpoint, as the price action still consists of lower highs and lower lows. That said, a break below 50.50 is required to signal that the bigger downtrend is back in force.
If the sellers retake the reins, their first obstacle may be the 50.50 zone, where a downside break would mark a lower low on the daily chart – turning the outlook firmly negative. In that case, attention may next shift to the 47.05 area, marked by the inside swing high on December 26.
On the flipside, if the recovery continues and the bulls manage to overcome the 56.20 territory, where both the 50- and 200-day simple moving averages (SMAs) are roughly located, then the 58.80 level would come into scope. A successful break of this hurdle too, could signal a more neutral bias.
Summarizing, a move below 50.50 is needed to confirm a resumption of the larger downtrend, while a break above 58.80 may be a sign of a more neutral climate.