WTI oil futures (August 2017 contract) rose to 47.09 today, its highest level since June 7. Near-term upside momentum has weakened as the market reached overbought conditions on the 4-hour chart, which is highlighted by the RSI indicator being above 70.
The rebound from the June 21 low of 42.02 does not look like it is reversing anytime soon and the short-term bullish bias will remain intact as long as the market remains above the 200-period moving average, currently at 46.75. This is now providing immediate support. A break below this would target the next support level at the June 30 low of 45.81 before heading towards further support levels at 44.63 and 43.54. A deeper decline would open the way to target the June 21 low at 42.02, consequently erasing the gains made after rising from this low. Such a move would see a resumption of the longer-term downtrend that started in April.
Due to overbought conditions on the 4-hour chart, the market is expected to consolidate at current levels. Should upside momentum resume, there is scope to target 48.37, the June 6 high, before other resistance levels come into view at 50.25 and 51.97.
While the recent rally is overbought, only a move below 44.50 would indicate a reversal in the recent uptrend.
