WTI oil futures have been trading above the short-term ascending trend line in the 4-hour chart but are consolidating in a narrow range over the last couple of weeks. The three-and-a-half month high of 57.85 acts as significant upper boundary of the channel while the 55.00 handle is the lower boundary.
Currently, the price remains below the 20- and 40-simple moving averages (SMAs) with very weak momentum. The technical indicators are supportive of this view as the RSI is neutral marginally below the 50 level and the MACD is flattening around the zero line.
In case of a successful penetration to the downside of the diagonal line and the 55.00 barrier, oil prices would switch the bullish bias to a more neutral one, resting at the 23.6% Fibonacci retracement level of the upward movement from 42.50 to 57.78 around 54.18. More downside extension could push the price until the 53.50 support, while even lower it could touch the 52.10 hurdle and the 38.2% Fibonacci of 52.00.
In the alternative scenario, a bullish rally could find immediate resistance near the 40- and the 20-SMAs but a jump above them could send prices until the 57.85 – 58.15 resistance area. More advances could drive WTI until 59.90 taken from the bottom on March 2018.
Overall, the short-term bias is in a bullish correction mode after the rebound from the 18-month low and a successful close above 57.85 could endorse this view.
