WTI crude oil continues to trend lower on its 1-hour chart as it tests the resistance of the descending channel. If this keeps holding, price could eventually fall back to the downside targets marked by the Fib extension tool.
Price has a ways to go before hitting the first support at the 38.2% Fib that lines up with the mid-channel area of interest and swing low. Sustained bearish pressure could take price down to the 50% level that’s close to the $50 per barrel mark or the 61.8% extension at $49.04 per barrel. The 78.6% extension is below the channel support at $47.47 per barrel and the full extension is at $45.47 per barrel.
RSI has room to head lower before indicating oversold conditions or exhaustion among sellers, but the oscillator already seems to be heading back up to show that bulls are eager to return. Stochastic is also heading up without even reaching the oversold region to show that buying momentum could pick up soon.
In that case, a break past the channel atop around the $53.50 per barrel level could be enough to mark a reversal from the slide. The 100 SMA is below the longer-term 200 SMA for now to show that bearish momentum is still present, but the gap between the indicators is narrowing to signal a possible bullish crossover. The 200 SMA that lines up with the channel top is holding as dynamic resistance for now, but a break above this could be enough to encourage bulls to charge.
Crude oil was previously bogged down by larger than expected gains in stockpiles, but it managed to pull off a strong finish late last week on hints that Saudi Arabia could extend its output deal in order to keep prices supported. Its Energy Minister noted that $60 per barrel crude oil is not enough to draw more investors in, which suggests that the kingdom is keen on making adjustments to boost prices.