WTI crude oil has broken down from the ascending trend line that guided its climb from the $68.00 area all the way up to the $93.83 swing high, signaling that the rally may be running out of steam.
Price sliced through this rising support with a sharp selloff before finding its footing around the $83.10 level, and is now attempting a recovery back toward the broken trend line.
The Fibonacci retracement tool, drawn from the $83.10 low to the $93.83 high, offers a roadmap for how far this bounce could extend. The 38.2% Fib sits at $87.20, followed by the 50% level at $88.46, while a deeper recovery could reach the 61.8% Fib at $89.73, which lines up closely with where the broken trend line now resides.
That confluence could make this zone a tough ceiling to crack, especially since it also marks the area where sellers previously stepped back in.
On the moving average front, the 100 SMA remains above the 200 SMA, with both still sloping higher to suggest that the broader uptrend has not been fully undone despite the recent trend line break. Price is currently trading just above the 200 SMA, which could offer some dynamic support if the pullback deepens further.
A failure to reclaim the broken trend line and the Fib cluster above could open the door to a larger reversal, potentially dragging crude oil back toward the $83.10 low or lower. On the other hand, a decisive push through this resistance zone could put the climb back on track toward retesting the $93.83 swing high.
Stochastic recently dipped into oversold territory and is curling higher, hinting that bullish momentum could be building. RSI, meanwhile, is still working its way up from a low reading, leaving some room to climb before buyers would need to worry about overbought conditions.
Geopolitical developments could continue to move crude oil prices, though dollar trends stemming from the FOMC statement midweek could drive direction for the latter half.
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