WTI crude oil has broken down from a descending wedge pattern that formed from late July until early August, as sellers pushed the price below the rising trend line support near the $80.00 mark.
The breakdown initially took price down to the $78.26 area, but buyers have since stepped in to spark a recovery attempt. If the climb continues, WTI could run into resistance around the former wedge support, which now lines up closely with the Fibonacci retracement levels drawn from the swing low to the swing high.
The 38.2% Fib retracement is at $81.74, which is where price is currently attempting to push through. A stronger rebound could carry the commodity up to the 50% level at $82.81, or even the 61.8% Fib at $83.89 near the lower wedge trend line. A break above these levels could open the door back to the wedge top and the 100% extension near $87.37.
On the other hand, a rejection at any of these Fib hurdles could reinforce the descending wedge breakdown and drag price back toward the $78.26 low or lower.
The 100 SMA is below the 200 SMA, keeping the path of least resistance tilted to the downside for now, although the gap between the two is narrowing as price attempts to claw back some of its recent losses.
Stochastic has surged sharply higher and is nearing the overbought region, reflecting a strong return in bullish momentum after spending time in oversold territory. If the oscillator turns lower from here, it could signal that buyers are running out of steam near the Fib resistance zone.
RSI is also climbing out of the oversold area and has room to run before reaching overbought levels, suggesting that the recovery could still have some legs before sellers regain control.
Crude oil appears to be unwinding the war premium from the latest round of escalation, though uncertainty remains as Iran has denied any “Hormuz deal” that Trump mentioned.
Comments
Log in or sign up to join the conversation.