Oil’s Technical Resistance Stiffens It’s Resolve

Technical resistance and overbought short-term indicators are setting of more red lights on Brent and WTI charts as we head into the week’s end.

Oil traded with lots of noise overnight, but ended the session becalmed, with both contracts closing within 30 cents of their opening levels. This has been the picture since Tuesday in fact, with decent intraday volatility but with both Brent and WTI almost unchanged as we enter the last day of the week.

Of more concern is the technical picture for crude with WTI failing for the 4th day in a row below 58.00 and Brent unable to break its double daily top at 64.85. Brent, in fact, has tested and failed ahead of this level every day this week. Worryingly, both the Brent and WTI daily Relative Strength Index’s (RSI’s) remain at extremely overbought levels. When combined with the multiple day failures at resistance this week, the technical analysis picture is painting a very cautious picture for bullish oil positioning ahead of the weekend.

Brent crude is 20 cents higher from its New York close, at 64.20 in early European trading. Resistance is now clearly marked at the 64.80/65.00 area with a break implying further gains to 66.00. Support is at 63.10 and 62.50 with a failure there opening up a much deeper correction to 60.00.

Brent Crude Daily

WTI spot is unchanged at 56.95 and needs to capture the 57.80/58.00 region to inject new life into the bullish trend. A daily close above this level sets up a test of 60.00 and 61.00. Support is at 56.20 followed by 55.50 and then 53.70.

WTI Daily

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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