WTI has experienced a day of indecision having failed to significantly break through a key support level. It did briefly create a new low for the year but didn’t manage to gather any momentum.
For now, it remains in a downward spiral but it’s yet to be seen whether the bears have enough to smash through that support. If it does, the move lower could be quite aggressive.
The 4-hour chart doesn’t offer a huge amount of insight into this either. The last leg lower in the sell-off was met with divergence in both the MACD and stochastic which suggests a slowing in momentum.
This alone doesn’t indicate a reversal but it does act as a warning that one could be approaching. If accompanied by a reversal set up in price action, it would be a good bullish indicator. Especially as it comes on a key support level.
If anything, price action on the 4-hour chart still looks bearish with today’s consolidation looking like a flag – a bearish continuation pattern. This may suggest that the bears are preparing another assault on that support. Another failure could see bears rethink their position.
As it stands, today’s candle looks like a doji or spinning top. Alone this doesn’t generally suggest a directional bias. If it closes as it is, tomorrow’s candle should offer much more insight.
As already stated, a break of this week’s low could prompt some quite aggressive selling. A close tomorrow above 44.11 (two thirds of the way into Tuesday’s candle), following a doji or spinning top, would create a morning star formation, a very bullish setup that may indicate a more significant correction.