WTI crude oil has broken down from a bearish wedge formation on the short-term chart, confirming that the earlier downtrend is resuming after a brief consolidation.
Price has since tumbled sharply toward the $79.62 swing low area, and a potential retest of the broken wedge support could attract more sellers looking to join the move. The Fibonacci retracement tool drawn from the $93.64 swing high to the $79.62 low marks the key levels where sellers could be waiting on any corrective bounce.
The 38.2% Fib sits at $84.97, followed by the 50% level at $86.63. A larger pullback could reach the 61.8% Fib at $88.28, which lines up closely with the broken wedge structure and could serve as the line in the sand for a bearish retracement.
If any of these Fibonacci levels cap the recovery, WTI could resume the slide back toward the $79.62 swing low or even push to fresh lows below that floor.
On the moving averages front, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. Both indicators are trending lower and converging above current price, reinforcing the overhead resistance picture.
Stochastic has plunged deep into the oversold zone, reflecting extreme exhaustion among sellers. The oscillator appears to be attempting a turn higher, which could trigger a short-term corrective bounce toward the Fibonacci retracement levels before the downtrend resumes.
RSI is similarly stretched to the downside and approaching oversold territory, leaving the door open for a relief rally. However, until price reclaims the $84.97 area at minimum, the broader bias remains tilted to the downside.
Growing optimism for a US-Iran peace deal appears to have weighed on global supply concerns, forcing crude oil to unwind its war premium. Still, any escalation could revive supply risks and prop prices up again.
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