WTI crude oil continues to climb inside a well-defined ascending wedge, with price currently testing the upper boundary of the pattern near the $84.50 to $85.00 area.
A wedge formation like this often signals that the trend is due for a resolution, whether that comes in the form of a breakout higher or a pullback toward wedge support.
If the upper trendline holds as resistance, crude oil could see a corrective dip back toward the rising 100 SMA near $81.50, or further down to the lower wedge trendline and 200 SMA confluence closer to $78.00.
Both moving averages remain in a bullish configuration, with the 100 SMA above the 200 SMA and the gap between them widening, confirming that the path of least resistance stays tilted to the upside even if a near-term correction unfolds.
On the other hand, a decisive break above the wedge top could trigger a measured move rally, projecting a rally of similar magnitude to the wedge’s widest point near its base. This could open the door for WTI to test the $90.00 handle or higher, especially if bullish momentum accelerates on the breakout.
Stochastic has been cycling rapidly between overbought and oversold territory throughout the rally, currently pushing back up into overbought levels. This reflects the choppy, momentum-driven nature of the climb, though a turn lower from here could hint that another shallow pullback is brewing before the next leg up.
RSI is also elevated and trending higher, suggesting that buyers still hold the upper hand for now. Should the oscillator roll over from current levels, it could reinforce the case for a retreat toward wedge support before crude oil attempts another run at the resistance zone.
WTI crude oil has drawn additional support from news reports indicating that neither the US nor Iran are willing to resume negotiations now that both countries extended strikes to the 11th day in a row.
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