- Last week’s intra-week loss of -17% has been recovered partially.
- Positive technical analysis elements sighted; “Morning Star” daily Japanese candlestick.
- Short-term overbought condition in hourly RSI highlights the risk of a minor pull-back.
West Texas Oil Technical Analysis – Minor uptrend intact but risk of a pull-back
Fig 1: West Texas Oil trend as of 8 May 2023 (Source: TradingView, click to enlarge chart)
The West Texas Oil (a proxy for the WTI crude oil futures) managed to stage a partial reversal last Friday, 5 May on its initial prior intra-week losses of around -17% where it was going to record its worst weekly decline in three years since the onset of the pandemic in early March 2020.
West Texas Oil has formed a daily bullish reversal three-candlestick configuration called “Morning Star” via the price actions captured on 3 May, 4 May, and 5 May 2023. The formation of such a bullish reversal Japanese candlestick confirmation indicates a possible change in the bearish sentiment of the prior short-term downtrend of West Texas Oil in place since the 12 April 2023 high of US$83.53/barrel.
On a minor scale as seen from the 1-hour chart, the recent up move of West Texas Oil from its 4 May low of US$63.67/barrel has evolved into a minor ascending channel that depicts a minor uptrend phase in progress.
But this ongoing minor uptrend phase has just reached the upper limit of the ascending channel at around US$73.00/barrel with the 1-hour RSI oscillator at overbought condition (above 70%). These observations suggest that the upside momentum of the minor uptrend has reached overstretched conditions where the risk of a minor pull-back has increased at this juncture with the immediate support to watch at US$71.05/barrel.
US$69.30/barrel is the short-term pivotal support to maintain this minor uptrend with the next resistances at US$74.25/barrel and a break above it may see the next resistance coming in at US$76.05-76.80/barrel (also coincides with the minor descending trendline from 13 April 2022 high & the 20-day moving average where the price actions have trading below it since 20 April 2023).
On the other hand, failure to hold above US$69.30/barrel jeopardizes the minor uptrend to expose the key medium-term support zone of US$62.80-61.65/barrel.
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Kelvin Wong