WTI oil futures restart downtrend

• WTI oil futures fall to two-month low on rising US stockpiles
• Short-term risk bearish, but market could be oversold
• A clear close below 77.44 could activate fresh selling

WTI oil futures slid to a two-month low of 76.99 on Wednesday after their continuous attempts to climb above the 200-day exponential moving average (EMA) at 79.10 proved fruitless.

Breaking below an important support trendline, the price might experience additional losses, but there’s a chance for a rebound around 77.44 at the 50% Fibonacci retracement of the December-April upleg before a strong sell-off towards the 38.2% Fibonacci mark of 75.21. Even lower, the bears could rest near the constraining zone of 73.60 and then around the 78.6% Fibonacci of 72.00.

Note that the RSI and the stochastic oscillator are hovering near their oversold levels and around a previous pivot area. Hence, an upside reversal or some stabilization cannot be excluded.

However, to reach the 20- and 50-day EMAs at 80.88, a clear move above the 200-day EMA might be a prerequisite. The ongoing downleg could come into question if the recovery continues above the descending trendline at 81.45 and the 38.2% Fibonacci of 82.45. Should the bar around 84.00 give way too, then the bulls might advance towards the 86.92 peak, unless the 85.30 former barrier blocks the way up.

In brief, WTI oil futures are expected to come under renewed downside pressure in the short-term if the bears achieve a close below 77.44.