WTI Oil Technical: Evolving into minor uptrend

  • 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

Kelvin Wong

Senior Market Analyst, OANDA 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.