WTI testing 3-week highs: Will the bounce stick?
West Texas Intermediate (WTI) crude oil is rallying today, helped along by a story that OPEC+ was considering cutting production if/when Iran’s production started to hit the market, reducing fears of continued oversupply in the coming months.
From a technical perspective, the selloff in WTI has stopped exactly where experienced technicians might have expected: At previous-resistance-turned-support near the $85.25 level. For the uninitiated, the polarity principle of technical analysis states that previous resistance levels, or ceilings on price, become future support levels, or floors for prices, once they are broken, precisely as we’re seeing in the WTI chart.
Now, crude is testing the top of its 3-month bearish channel, as well as the previous high in the $94.00 area. A confirmed break above here would open the door for a bullish continuation toward the 100-day EMA in the $99.00 zone, whereas a reversal back to the downside would suggest that the bearish trend remains intact for a retest of the key $85.25 sooner rather than later.
From a technical perspective, the selloff in WTI has stopped exactly where experienced technicians might have expected: At previous-resistance-turned-support near the $85.25 level. For the uninitiated, the polarity principle of technical analysis states that previous resistance levels, or ceilings on price, become future support levels, or floors for prices, once they are broken, precisely as we’re seeing in the WTI chart.
Now, crude is testing the top of its 3-month bearish channel, as well as the previous high in the $94.00 area. A confirmed break above here would open the door for a bullish continuation toward the 100-day EMA in the $99.00 zone, whereas a reversal back to the downside would suggest that the bearish trend remains intact for a retest of the key $85.25 sooner rather than later.