WTI Crude – Bears Eyeing Third Assault on Support

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.

WTI Daily

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.

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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