WTI oil futures need to breach $83 to brighten outlook

WTI oil futures have been tiptoeing sideways along the upper boundary of the seven-month-old bearish channel and within a tight range of $79.00-$81.00 so far this week.

The trend signals are still discouraging as the price has been struggling to post new higher highs above the $81.00-$83.00 ceiling since the start of the year, while the exponential moving averages (EMAs) have yet to print bullish crosses yet, endorsing the broad negative trajectory in the market.

On the other hand, the momentum indicators are in favor of the bulls. The slowdown in the stochastic oscillator is mirroring some weakness in buying appetite as the price is trading near the upper Bollinger band. Yet, the indicator has not slipped below its 80 overbought level yet, while the RSI and the MACD remain elevated within the bullish region, keeping the short-term bias on the positive side.

Should the bulls claim the $81.00-$83.00 zone, which encapsulates the 38.2% Fibonacci retracement of the 2020-2022 uptrend, the price could crawl up to the $86.00 barrier. An extension higher could find resistance near the $88.60 handle, while a steeper increase could head for the October-November bar of $92.60.

In the event sellers push below $80.00, support could initially develop around the former resistance zone of $77.70. Beyond that, the 20- and 50-day EMAs may attract some attention within the $75.00 territory before the focus turns again to the range’s bottom seen around 73.00.

All in all, WTI oil futures are still attractive to buyers in the short-term picture, though traders may stay patient until the price successfully breaches the $81.00-$83.00 wall or slides below $80.00 before they target higher levels.  

About the author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.