WTI crude oil bounced off the resistance area as previously expected, setting its sights back on the range bottom. Price appears to be finding some buyers at the mid-range area of interest, though, and could still be due for another test of resistance.
The 100 SMA just crossed below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This means that resistance is more likely to hold than to break and support is more likely to break than to hold. A move below the range support at $72.50 per barrel could lead to a drop of the same height as the range or around $2. At the same time, the moving averages are holding as dynamic resistance.
However, RSI is on the move up after a dip to the oversold region, indicating that bullish pressure might still return. Similarly stochastic is pointing up to indicate that buyers are getting ready to regain control of crude oil price action.
Crude oil is currently being pulled by opposing forces, one of which is the expected increase in output from the OPEC and the other is the expected drop in output from Iran and Venezuela. US sanctions on the country could limit the flow of oil to the global market, thereby putting upward pressure on crude oil.
However, the US has also urged its allies to stop buying oil from Iran, which might then isolate the impact to the world economy. He has also increased pressure on the OPEC to do more to stabilize the oil market.
Trade war tensions are back in the headlines as the US released a list of Chinese goods to be targeted for higher tariffs. China is widely expected to announce countermeasures, especially since the latest set of tariffs is larger than the one announced earlier in the month.