WTI crude oil futures are recovering somewhat after the sharp collapse to a multi-year low of 6.62 on Tuesday. The renewed selling interest broke the 19.32 strong barrier (resistance now – support before) to the downside, opening the way for steeper declines. However, currently, the momentum indicators are suggesting a possible upside pullback in the short-term.
The stochastic oscillator is turning higher after the bullish crossover within the %K and %D lines in the oversold zone, while the RSI is pointing north near the 30 level, indicating the end of the strong bearish sentiment.
A potential continuation of the positive move could send the commodity towards the next resistance of 19.32 and the lower surface of the Ichimoku cloud ahead of the 23.6% Fibonacci retracement level of the downside movement from 65.61 to 6.62 at 20.56. Higher still, investors could turn their focus to the 20-day simple moving average (SMA), which currently stands near 23.80. Then the price could move until the 29.00 round number, which is the 38.2% Fibonacci and overlaps with the 40-day SMA.
Alternatively, in case of a downfall again, immediate support would come from the multi-year trough of 6.62, before the price challenges the next psychological marks such as 6.00, 5.00 and 4.00.
In summary, WTI futures are expected to get some relief from the strong bearish structure in the near term, but the direction is clearly to the downside in the medium- and long-term timeframes.
