WTI oil futures for June delivery have been moving back and forth since the plunge to 6.62 last week, forming a double bottom pattern around the 10.00 level on the four-hour chart. The bullish reversal pattern, however, needs a confirmation above the neckline that is placed around the 18.00 mark to turn valuable.
Currently, the momentum indicators are painting a positive picture for the short-term as the MACD is strengthening in the positive area for the first time since early April, the RSI is also comfortably within the bullish zone although somewhat flat, while in Ichimoku indicators, the red Tenkan-sen line has crawled above the blue Kijun-sen line and keeps rising.
A decisive close above the 18.00 neckline and on top of the cloud may generate additional buying pressure, with traders likely searching for resistance somewhere between 20.00 and 21.40. The 23.00 mark and more importantly the 200-period SMA tough obstacle, which strongly rejected upside movements early this month, could come next under the spotlight.
On the other hand, a reversal below the 17.00 level and the short-term supportive trendline, could initially see a retest of the 15.12 number. Breaking further below the cloud, the sell-off could next take a breather somewhere between 14.00 and 13.00. To resume a bearish profile, the market should push back below 10.00.
Summarizing, WTI oil futures are at a crucial point, not far from the key 18.00 resistance that looks to be the neckline of a double bottom formation. Clearing that ceiling, the market could come under renewed bullish appetite.
