WTI oil futures (October delivery) have been in a steady advance since early July, generating a structure of higher highs and higher lows. Moreover, in yesterday’s session, the price climbed to a fresh nine-month peak of 88.08 before paring some gains.
The momentum indicators currently suggest that the recent rally could be overstretched as both the RSI and the stochastic oscillator are within their overbought territories, while the price is trading near the upper Bollinger band. Hence, a potential downside correction might be on the cards.
Should the bulls attempt to push the price higher, initial resistance could be found at the 90.00 psychological mark, which also held strong in September 2022. Further advances could then cease at the November 2022 high of 92.50. Piercing through that wall, oil prices may then challenge the August 2022 peak of 97.70.
On the flipside, if buying interest fades and the price corrects to the downside, a series of previous resistance zones such as 84.15, 83.40 and 81.00 may serve as support regions in the future. Sliding beneath the latter, the price could face the August low of 77.60.
In brief, WTI oil futures have been exhibiting persistent strength lately, recording consecutive multi-month peaks. Nevertheless, a downside correction should not be ruled out as the latest advance has reached overbought conditions.
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