WTI traded lower on Monday, after it hit resistance at 93.40 on Friday. However, overall, the price continues to trade above the upside support line drawn from the low of December 20th, which combined with the break above the key resistance zone of 89.15 on Thursday, paints a positive near-term picture.
The retreat may continue for a while more, but the bulls could take charge from near the crossroads of the aforementioned upside line and the 89.15 barrier. This could result in a rebound and another test near the 93.40 barrier, or even the 94.75 zone, marked by the high of September 30th, 2014. If market participants are not willing to stop there, then we could see them pushing the action towards the 98.50 zone, defined a resistance by the high of August 11th, 2014.
Shifting attention to our short-term oscillators, we see that the RSI turned down and exited its above-70 zone, while the MACD, although above both its zero and trigger lines, has turned down as well and looks ready to fall below its trigger line. Both indicators detect slowing downside speed, and add to the case of some further retreat before the next leg north.
On the downside, we would like to see a clear dip below 86.75 before we start examining the case of a trend reversal. This will not only confirm the break of the aforementioned upside line, but also a forthcoming lower low on both the 4-hour and daily charts. The bears could then get encouraged to dive towards the 83.40 or 82.35 barriers, marked by the lows of January 25th and 24th respectively, the break of which could carry extensions towards the inside swing high of January 7th, at 80.55. Another break, below 80.55 could pave the way towards the low of January 10th, at 77.90.
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