WTI oil futures turned sharply bullish in the short term after surging from the 50-handle to hit a high of 52.40, a level not seen since April 19. The upward trajectory lost steam and the market is now capped at this 5-month high.

The broader trend is bullish ever since prices bounced off the 47 area on September 11. The market entered a consolidation phase on September 15 and traded in a range between 49.65 and 51.09 until the break out yesterday. The market is neutral again after becoming overbought, as indicated by the RSI rising above 70 on the 4-hour chart.

While upside momentum has weakened, the underlying trend higher has potential to extend since momentum oscillators are in bullish territory and the short-term moving averages are positively aligned after the 20-period MA crossed above the 50-period MA.

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Support is expected at yesterday’s low of 51.18 ahead of the key 50-level and range-low of 49.65. A deeper extension lower would shift the bias to the downside to target the September 14 low of 49.13 and then 48.11 (20 MA support). From here the key 47-level comes into view as major support.

Resistance at 52.40 will likely be challenging to break. If successful, there is scope to rise towards the 53 level and reach the next major peak at 53.73 (April 12 high).

In the near term, WTI oil is expected to trade in a choppy range. The bullish trend from the end of August is expected to remain intact. Only a drop below 49 would end the short-term bullish outlook.

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