WTI oil futures are at their highest level since July 2015 after a strong rally took prices above the key 57.00 level, hitting as high as 57.66. The short-term trend is clearly to the upside but the market has become overextended. This is indicated by the RSI on the 4-hour chart, which is now above 70 in overbought territory.
As the rally appears to be exhausted, the market is likely to consolidate in the near term and possibly pull back towards support at 57.00. Breaking below this key level would place prices under pressure to slip back towards 54.00. From this point, further weakness can be expected, with scope to target 49.00, a level that was approached a month ago.
Trend indicators on the 4-hour chart remain bullish. The 20 and 50-period moving averages are sloping upwards, while Ichimoku cloud analysis is showing positively aligned Tenkan-sen and Kijun-sen lines.
The uptrend is still in progress with no signs of a reversal yet, although momentum has slowed. The current consolidation phase is deemed corrective and the bullish bias is expected to remain strong in the near term.
