WTI oil extends lower on Wednesday and penetrated rising daily cloud which underpinned the action in past couple of sessions.
Tuesday’s close in red was initial signal that strong four-day recovery rally from higher base at $58.10 zone is running out of steam, with completion of bearish Harami pattern generating stronger negative signal.
Break into daily cloud (cloud top so far caps today’s action and marks strong resistance at $61.73) extended lower to crack next pivotal support at $60.93 (Fibo 38.2% of $58.19/$62.63 upleg), with close below here to generate reversal signal.
Slow stochastic reversed from oversold territory on daily chart, RSI turned south after ranging in neutrality zone, while 14-d momentum continues to trend lower, deeply in negative territory, reinforcing bearish signal.
Firm break below $60.93 would spark further weakness and expose targets at $60.34 (daily Tenkan-sen) and key $59.89/84 supports (Fibo 61.8% of $58.19/$62.63 / daily cloud base).
Alternatively, bounce and close above daily cloud would neutralize bearish threats and shift focus higher.
Release of US API crude inventories due later today is eyed, ahead of EIA crude stocks report, which will be released tomorrow (releases were postponed for one day due to US holiday on Monday).
Traders are cautious ahead of inventories reports, with concerns about further build of US crude stocks which could put oil prices under additional pressure.
Res: 61.73, 62.00, 62.35, 62.63
Sup: 60.90, 60.64, 60.34, 59.89
