Technical analysis: WTI crude oil
WTI crude oil broke a long-term uptrend line at the end of March and has been trading in a downtrend channel ever since as traders are starting to think a solution between Iran and the West is more likely than not.
Following last week’s IEA report, finding that global oil suppliers have become less constrained in the past few weeks, even as US and EU sanctions on Iran are pushing Iranian crude off the market, and the agreement between Iran and the West to keep talking over the weekend to come to terms over Tehran’s nuclear programme, it looks like there is room for further downside over the next few days.
The market rose slightly on Monday, bouncing from the recent lows at 100.58. At 103.51 this morning WTI crude remains locked in the tight downtrend channel. With a bearish alignment of the 20 EMA below the 50 EMA and the MACD signal line below the zero line, the bears appear to have taken the control on the daily chart.
Considering the negative line capping RSI and the MACD signal line set to cross below zero on the four-hour chart, the bias remains bearish. As the bulls continue to be unable to break above key resistance at 104.74, short positions targeting 100.00 are favoured. In the alternative scenario, a break above 104.00 could re-test the recent 2012 highs above 108.
Published: 17 April 2012
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