WTI traded lower during the European morning Thursday, but the slide was halted by the crossroads of the 71.15 support line and the lower end of a rising wedge formation that’s been containing the price action since the last days of March. The broader trend remains positive, marked by an uptrend line drawn from the low of the 30th of August. However, the fact that the bears are now flirting with the lower bound of the aforementioned wedge make us cautious that a corrective phase may be looming for now.
A decisive break below 71.15 is likely to confirm the downside exit of the wedge and could initially aim for our next support level of 70.45, marked by the low of the 15th of May. That said, we would like to see a clear dip below 70.20 before we get confident on larger declines. Such a dip could open the way towards the 69.30 hurdle, defined by the inside swing peaks of the 24th and 30th of April.
Looking at our short-term oscillators, we see that the RSI turned down after it hit resistance at its 50 line, while the MACD, already below its trigger line, has just obtained a negative sign. These indicators reveal downside momentum and increase the likelihood for WTI to break the lower end of the wedge.
On the upside, we would like to see a clear move above 72.80 before we start examining the resumption of the prevailing uptrend. Such a break is possible to initially set the stage for the 73.65 zone, a resistance marked by the inside swing low of the 19th of November 2014.
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