WTI Oil Technical: Bullish exhaustion sighted below US$93.80 per barrel key resistance

  • Recent 4 weeks of bullish movement in WTI crude oil has flashed out bullish exhaustion conditions.
  • At the risk of shaping a bearish counter-trend/mean reversion movement within a major uptrend phase.
  • Key resistance will be at US$93.80 with intermediate support zone of US$86.30/US$84.90

West Texas Oil (a proxy of WTI crude oil futures)’s relentless medium-term uptrend move of +19% from the 24 August 2023 low of US$77.00/barrel to yesterday’s 19 September high of US$93.05/barrel has flashed out sights of bullish exhaustion where the next set of price actions are likely to be a bearish counter-trend/mean reversion movement within its major uptrend phase that is still intact since 4 May 2023 low of US$63.67/barrel.

Bearish “Shooting Star” formed right below key resistance

Fig 1:  West Texas Oil medium-term trend as of 20 Sep 2023 (Source: TradingView, click to enlarge chart)

During yesterday’s intraday session, price actions continued their bullish impulsive movement during the Asian and European sessions but sizzled out throughout the US session as it closed near the low (US$90.93) of the day, 19 September.

This set of intraday price action behaviours culminated into a daily “Shooting Star”, a bearish reversal Japanese candlestick pattern and the appearance of such candlestick right below a key resistance of US$93.80 (medium-term swing highs of 10 October/7 November 2022 & a Fibonacci extension cluster) increases the odds of bearish counter-trend movement next.

Bearish breakdown below minor ascending channel support

Fig 2:  West Texas Oil minor short-term trend as of 20 Sep 2023 (Source: TradingView, click to enlarge chart)

As seen on the shorter time frame 1-hour chart, yesterday’s intraday price actions movement has also staged a bearish breakdown below a minor ascending channel support which indicates the recent minor uptrend phase from the 23 August 2023 low of US$78.03 is likely to have reached a terminal point.

The next set of price actions is likely to be bearish at least in the short term supported by a bearish divergence condition at the overbought zone seen in the hourly RSI that advocates an emergence of bearish momentum.

If the US$93.80 key pivotal resistance holds and a break below the near-term support of US$89.50, the price actions of West Texas Oil are likely to slide further in the context of a bearish counter-trend movement towards the intermediate support zone of US$86.30/US$84.90 (also the upward slopping 20-day moving average).

However, a clearance above US$93.80 invalidates the minor bearish scenario for a continuation of the bullish impulsive up move sequence towards the next resistances at US$95.80 and US$97.60 (congestion area of 23 June 2022 to 9 July 2022 & the 50% Fibonacci retracement of the prior major downtrend from 7 March 2022 high to 4 May 2023 low).

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kelvin Wong

Kelvin Wong

Senior Market Analyst, Asia Pacific at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.