WTI Crude Oil Price Analysis for Sept. 29, 2020

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WTI crude oil is still stuck in consolidation as it formed higher lows and slightly higher highs inside a rising wedge pattern on its 1-hour chart. Price is testing support and could be due for a break lower as suggested by technical indicators.

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. In that case, price could fall by the same height as the chart formation, which spans $38.50 per barrel to $41 per barrel.

However, crude oil is trading above both moving averages as an early indicator of bullish pressure, and these indicators line up with the wedge bottom to add to its strength as support.

Stochastic is on the move down so price could follow suit as selling pressure picks up. The oscillator has room to go before reaching the oversold region, so bearish momentum could stay on for a bit longer. RSI is treading sideways to reflect consolidation but also appears to have some downside.

Crude oil traders still seem to be waiting for the next major catalyst before deciding on a direction for the commodity. Note that supply is expected to increase as Libya resumes production while demand is likely to remain weak while businesses pare purchases while markets remain focused on the rising number of COVID-19 cases in several areas.

Short-term volatility could be influenced by the inventory data from the API and EIA, as a large reduction in stockpiles could be bullish for the commodity. On the other hand, a huge build could reflect a downturn in demand and potential oversupply, which could mean a downside wedge break for crude oil.

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