WTI Crude Oil Price Analysis for Sept. 17, 2020

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WTI crude oil recently fell through a rising trend line support level visible on the 4-hour chart, indicating that a reversal from the uptrend is in the works. A correction is taking place to gather more selling energy to sustain the drop.

Applying the Fibonacci retracement tool on the latest swing high and low shows that price is already pulling up to the 50% level around $40 per barrel. A larger correction could last until the 61.8% Fib at $41 per barrel that lines up with the 200 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA crossed below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is likely to pick up from here. Price is also finding resistance at the 100 SMA dynamic inflection point and could be due to fall to the swing low at $36.31 per barrel next.

Stochastic has made it to the overbought region to reflect exhaustion among buyers, and turning lower could mean that selling pressure is returning. RSI also looks ready to move south from the overbought zone to show that bears are taking the upper hand.

WTI crude oil enjoyed quite the rally after the Energy Information Administration reported a draw of 4.4 million barrels for the week to September 11 while analysts projected an inventory build of a bit over 2 million barrels for the period.

However, the commodity could return some gains as the dollar firmed after the FOMC decided to keep interest rates on hold as expected. Traders are also anticipating slower economic performance in the months ahead, which could mean even lower consumer spending and demand for fuel.

For now, weather disturbances are dampening production along the Gulf states, which could mean a pickup in output once facilities reopen.

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