WTI oil futures for January delivery closed above the 200-period moving average (SMA) on the four-hour chart on Wednesday and spiked to a one-month high of 58.64, confirming a new higher low at 54.84.

The price is currently consolidating around 58.60, this being the 61.8% Fibonacci of the 63.22-50.98 downleg, which is expected to challenge the bulls in the short-term as the RSI and the Stochastics flag overbought conditions – a sign that positive momentum may soften.

A downside reversal is expected to initially stall near the 57.80 former resistance level and then at the crossroads of the 50% Fibonacci of 57.14 and the upper surface of the Ichimoku cloud. Falling lower, traders will be interested to see whether the market can rebound somewhere between the 38.2% Fibonacci of 55.68 and the 200-period SMA. Failure to hold above the latter would bring a stronger obstacle around the 23.6% Fibonacci of 53.90 into view if the previous low of 54.84 is breached too.

- advertisement -

In the positive scenario, if the 61.8% Fibonacci of 58.60 fails to defend against the bulls the 59.26 number that pressured upside corrections in mid-September could take over ahead of the 60.00 mark.

In the bigger picture, although the market is in a sideways move within the 63.22 and 50.98 boundaries, the bullish cross of the 50-period SMA with the 200-period SMA increases hopes that the outlook may improve.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.