WTI oil futures (August delivery) lost almost 5% on Wednesday, tumbling to a six-week low of $101.53 before closing the day off its lows.
The bearish action breached the support trendline, which joined the lows from December’s bottom of $62.25, sending a warning signal that selling tendencies may escalate in the coming sessions. The clear negative trend in the RSI and the MACD, which have dipped back in the bearish area, is backing this narrative too.
That said, there is another shorter-term ascending trendline from April, which is still valid at $102.43, while the 23.6% Fibonacci retracement of the $130.50 – $92.19 downfall at 101.23 is adding extra importance to the region. Hence, sellers may wait for a decisive close below those obstacles before they aggressively squeeze the price towards the previous trough of $96.90. Then, all eyes will turn to the bottom of the three-month-old range area at $92.19. Notably, the 200-day simple moving average (SMA) is approaching the same territory. However, if it proves fragile, the decline could stretch towards the crucial constraining zone of $87.50 – $85.00.
Shifting to the upside, the price will need to crawl above the $108.85 – $111.35 region to retest the 20-day SMA and the $114.50 constraining zone. Higher, the $118.32 mark could reinforce some consolidation before the door opens for June’s high of $120.87.
Summarizing, WTI oil futures may remain under pressure in the short-term. A significant move below $101.23 could to set the stage for another sharp decline towards $96.90.