WTI oil futures are making a corrective move after outperforming in recent weeks. The underlying uptrend is still intact, with prices peaking at 59.02 on November 24 following a recent strong rally off the key 55 level.
Looking at the 4-hour chart, the market has come under increased pressure after breaking below the shorter-period moving average (20-MA). The RSI has broken below 50, suggesting that the bearish momentum could push prices lower towards the key 57 level. This is expected to act as a strong support level.
As long as the market stays above 57 then there is a possibility of a bounce back towards 58.35. Breaching this soft resistance level would see prices re-test the 59.02 peak and then resume the uptrend. Alternatively, a further decline below the important threshold at 57 would see a start of a reversal of the recent upleg from 54.79.
The fact that prices have fallen out of the rising channel does not bode well for the market’s near-term outlook. A daily close below 57 would give the recent sell-off increased momentum to the downside.
