WTI crude oil is trading sideways, finding support at the $83 per barrel mark and near-term resistance around $86.15 per barrel. Price is testing the bottom of the range and might be attempting a bearish break.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. If that happens, crude oil could be in for a drop that’s the same height as the rectangle pattern.
Also note that the commodity is trading below both moving averages, so these could hold as dynamic resistance on pullbacks. The gap between the indicators is also widening to reflect strengthening selling pressure.
Stochastic is indicating oversold conditions and looks ready to turn higher, reflecting a possible return in bullish momentum. In that case, crude oil might still be able to bounce off support and even test the top of the range near the 200 SMA. A break above this could send the commodity price back up to the next resistance close to $90 per barrel.
RSI is on middle ground to reflect consolidation, barely offering strong directional clues at the moment.
Crude oil is on weak footing as risk-off flows have been in play for the most part of the week. Dollar strength stemming from the Fed’s third 0.75% interest rate hike this year is weighing on commodities and riskier assets, as this could translate to lower business and consumer activity down the line.
However, the commodity could be drawing some support from renewed tensions in Russia, after Putin announced partial mobilization of their military. This could mean more downside to global oil supply, which could potentially drive prices higher later on, as more sanctions could block access to the country’s pipelines.