WTI crude oil has shifted into a bearish phase, carving out a descending channel on the short-term time frame as price continues to print lower highs and lower lows.
The commodity is currently trading around $90.35, well off the swing high at $102.91, with the channel boundaries keeping sellers firmly in control of the near-term direction.
Price has bounced slightly off the lows near the $88.03 level, which marks the 0% Fibonacci retracement, but any recovery attempts are likely to run into resistance at the retracement levels overhead.
The 38.2% Fib is located at $93.72, followed by the 50% level at $95.47. A more ambitious correction could test the 61.8% Fib at $97.23, which also lines up with the descending channel top and the 100 SMA dynamic resistance zone, potentially the line in the sand for a bearish pullback.
On the moving averages front, the 100 SMA has crossed below the 200 SMA to confirm that the path of least resistance is to the downside and that selling pressure is more likely to gain traction than to ease. Both indicators are sloping lower above the current price, reinforcing the broader bearish bias.
Stochastic has climbed back up from the oversold area and is approaching the upper boundary of its range, suggesting that the corrective bounce may be running low on steam. A turn lower from current levels would signal a return in selling pressure, potentially sending crude back toward the channel bottom.
RSI is also ticking higher but remains below the midpoint, so there’s some room for a continued recovery before sellers reassert control.
If the Fibonacci retracement levels and descending channel resistance manage to cap any rallies, WTI crude could resume its slide toward the $88.03 swing low and potentially look for fresh lows below that mark.
Crude oil could continue to take cues from geopolitical headlines, as more signs of diplomatic progress being made could ease global supply concerns.
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