WTI Crude oil traded lower on Monday, breaking below the 71.05 key support (now turned into resistance) barrier, and thereby completing a failure swing top formation. This, combined with the fact that the price is trading below the upside support line drawn from the low of May 21st, as well as below the downside resistance line taken from the high of July 6th, paints a negative short-term outlook, in our view.
At the time of writing, the black liquid is hovering slightly above the 69.70 level, marked as a support by the low of June 17th, the break of which could extend the slide towards the 68.15 or 67.40 barriers, marked by the lows of June 3rd and 1st respectively. If the bears are not willing to stop there, then we could experience extensions towards the low of May 28th, at 66.15.
Shifting attention to our short-term oscillators, we see that the RSI has just touched its toe below 30, while the MACD remains below both its zero and trigger lines. Both indicators detect strong downside speed and support the notion that further declines may be on the cards for the black gold.
On the upside, we would like to see a recovery back above 75.50, the high of July 13th, before we start examining whether the bulls have gained the upper hand. This would also take WTI above both the aforementioned diagonal lines, and may initially target the peak of July 6th, at 77.00. If they manage to overcome that barrier as well, the bulls will find themselves testing territories last seen back in 2014, with the next resistance perhaps being the 79.60 territory. That territory prevented the price from drifting lower between October 16th and 31st of that year, and acted as a strong resistance after it was violated on November 3rd.
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