WTI Crude – Pressure Growing on Technical Support

WTI crude is under pressure again on Tuesday and is on course to test this year’s lows, set on 18 March, of $42.70.

A rally at the start of the week off a prior support – $43.20 – potentially suggested we were going to see some consolidation or a correction but that has certainly not materialized.

A break below yesterday’s low, albeit marginal, appears to suggest there remains further downside potential here. The next support is the 18 March lows and a break of this could see $40 come under significant pressure.

It should be noted that we are seeing divergence between the MACD histogram and price action which may suggest the sell-off is losing steam.

Alone, this doesn’t mean very much, as we saw when it made new lows on 28 July on falling momentum before continuing to decline.

On this occasion though, we are at a key technical support, 2015 low. A failure to break below $42.70 followed by a reversal setup such as bullish engulfing pattern or something similar would suggest that a bigger correction or reversal may follow.

WTI 4hr

We have to remember that WTI has experienced six weeks of decline despite already being at very lows levels. A correction, at least, would not be a surprise.

A failure at this level again may also confirm it as a floor in the price with it having experienced support on two other occasions.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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