WTI oil futures for January delivery staged a respectable rally on Wednesday but the 61.8% Fibonacci of 58.60 of the downleg from 63.22 to 50.98 proved a tough resistance to overcome.
The upside reversal in the 20-period simple moving average (SMA) following the bounce on the 200-period SMA is a positive signal that the upward direction in the price may not fade yet.
Still, the odds for a downside correction remain high as the RSI is not far below its 70 overbought mark. If the bears take control, immediate support may appear near the 58.00 level, a break of which may see a retest of the 57.48 number and the 50% Fibonacci of 57.14. Beneath the latter, sellers will be looking for a significant drop below the bottom of the channel and the 56.30 mark, while the 38.2% Fibonacci of 55.68 will be also closely watched given its supportive action in previous sessions.
If the 58.60 ceiling fails to hold this time, the next target could be the 59.22 barrier, while higher, all attention will turn to the 60 level and the upper trendline of the tentative ascending channel.
In brief, WTI oil futures may come under pressure in the short-term, especially if the price declines under 58.00. However, as regards the market trend, signals remain encouraging.
