WTI capped below $100: Short the bounce or wait for retest?

WTI Crude Oil remains capped below the $100 handle. Even after the recent bounce we highlighted in our weekly analysis, the market remains hesitant as the geopolitical risk premium fades. With a 10-day Lebanon-Israel ceasefire in effect and Trump signalling that the Iran war should end soon, we break down why rallies remain suspect and map out downside levels to watch.

Key topics covered
- Geopolitical De-escalation: Trump has stated the Iran war should end soon, and weekend talks are possible. Combined with the Lebanon-Israel ceasefire, markets are currently ignoring the IEA's warning about a two-year recovery for Middle East output, focusing on near-term de-escalation.
- Dead-Cat Bounce: We review the recent relief rally that perfectly stalled at the $98 level (between the 50% and 61.8% Fibos). The failure to reclaim the $100 psychological barrier confirmed this move was corrective, eventually leading to a fresh local low.
- RSI divergence & triangle pattern: A recent bullish RSI divergence has sparked a short-term recovery. We explain how this bounce could evolve into a triangle or pennant pattern. If price holds above $89, we could see a retest of the upper trendline, but the broader structure remains vulnerable.

WTI scenarios & trade plan
Bearish: The cleaner setup currently remains on the short side, as the recent downside move only hit the 61.8% extension, leaving the 100% extension untested.

• Setup: Aggressive traders may look to fade the current bounce if prices reject the near-term ceiling. Conservative traders may wait for a confirmed break of the lower trendline.
• Targets: The downside objective for this bearish continuation sits at $77.50.

Bullish (Triangle): If the current RSI divergence provides enough momentum, WTI could continue its short-term corrective bounce.

• Targets: A push higher would target the upper boundary of the developing triangle near $97 to $98.70 and potentially retest the $100 mark.
• Note: Unless WTI breaks that upper trendline, all rallies are treated as corrective and remain highly suspect.

Are you shorting the current bounce or waiting for the top trendline? Share your thoughts in the comments.

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