WTI Crude – Correction Seen as Divergence Forms

Earlier this week I highlighted $48.80-49.20 as a key resistance level for WTI (WTI Crude – New Trading Range Being Established?) with it having been so the last two times it traded at this level.

Despite it finding resistance again on Tuesday and Wednesday, it finally broke above here yesterday and has continued to push on today.

WTI Daily

It now appears to have run into resistance again around the next resistance area between $50.25 and $51, which has recently been an interesting area of support and resistance.

As you can see on the hourly chart below, the most recent rallies have come on declining momentum, creating a divergence between price and the stochastic and MACD. This suggests we may see a correction following what has been quite a strong rally to this point.

WTI 1hr

As I suggested previously though, given the hurdle that it overcame this week, I do think this will be a temporary resistance level and more gains could come following a shallow correction. It will be interesting to see now whether that prior resistance level now offers support.

This level coincides with the 50 fib – 6 May highs to 24 August lows – that has previously been resistance, as well as the 38.2 fib – 7 October lows to today’s highs. If this doesn’t hold, the 50 and 61.8 fibs will be of interest, $49.05 and $48.65, respectively.

To keep up to date with news affecting oil prices, check out the OANDA News Aggregator and our economic calendar.

News Aggregator

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