WTI crude oil traded higher yesterday, breaking above the 78.53 barrier, marked by the high of January 5th. That said, the advance was paused near the 80.52 level. Overall, the liquid is trading above the prior downside resistance line taken from the high of November 1st, as well as above the upside support line drawn from the low of December 20th. So, with that in mind, we will consider the short-term picture to be positive.
In order to get confident on larger advances though, we would like to see a clear break above the 81.75 barrier, which provided resistance on November 16th. The bulls could then get encouraged to push the action towards the psychological figure of 85.00, near the high of November 9th, or towards the 85.75 zone, marked by the peak of October 25th. If they are not willing to stop there either, we could see them climbing towards the inside swing low of October 6th, 2014, at 88.50.
Taking a look at our short-term oscillators, we see that the RSI is flat near its 70 line, while the MACD lies above both its zero and trigger lines, but it has flattened as well. Although both indicators detect upside speed, their flattening adds credence to our view for waiting for a break above 81.75 before getting confident on more advances.
On the downside, a dip back below 76.75 could signal that the bears have gained the upper hand for a while. WTI will be below the upside support line taken from the low of December 20th, and we may experience declines towards the low of January 3rd, at 74.27, or the inside swing high of December 27th, at 73.60. If that latter barrier is not able to stop the slide, its break could see scope for extensions towards the low of December 22nd, at 70.95, or the low of December 15th, at 69.35.
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