Jump to content

Market update: WTI oil faces potential decline


MongiIG

Recommended Posts

Crude oil prices may be readying to extend lower; daily chart is maintaining a broader bullish bias but, bearish Head & Shoulders in focus on four-hour chart.

 

original-size.webpSource: Bloomberg

 
Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco | Publication date: Wednesday 23 August 2023 

WTI crude drops lower

WTI crude oil prices may be reading to extend lower following recent technical developments, especially on the four-hour chart. For now, let us focus on the daily setting. Oil is currently on course for a second consecutive weekly loss, which has been fairly unusual for WTI given price action since May.

Is this a sign of technical exhaustion?

In recent days, WTI left behind new support around $78.99 after confirming a breakout under the rising trendline from June. This also followed the emergence of a Bearish Engulfing candlestick pattern. Meanwhile, resistance was established around $81.56. Below current price action, a bullish Golden Cross emerged between the 50- and 100-day moving averages (MAs).

So, while the near-term technical landscape is appearing bearish, the broader upside bias remains focused higher. But, there are brewing signs of potentially more bearish price action to come.

WTI crude daily chart

 

1-crude-oil-prices-ready-to-extend-lowerSource: TradingView

Prices sitting above bearish chart

Using the four-hour setting below, we can see the outlines of a Bearish Head & Shoulders chart formation taking shape. Recently, the peak of the right shoulder was established around $81.69. The neckline seems to be around $79.02.

Now, prices are sitting just above the bearish chart formation. Confirming a breakout lower could open the door to extending lower. That would place the focus on the $77.30 inflection point before the 17 July 2023 low of $73.81 comes into focus.

Otherwise, pushing back above the right shoulder may open the door to revisiting the 10 August 2023 high of $84.85.

WTI crude four-hour chart

 

2-crude-oil-prices-ready-to-extend-lowerSource: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...
us