WTI crude oil traded higher yesterday, breaking above the 78.53 barrier, marked by the high of Jan. 5. That said, the advance was paused near the 80.52 level. Overall, the liquid is trading above the last downside resistance line taken from the high of Nov. 1 and above the upside support line drawn from the low of Dec. 20. So, with that in mind, we will consider the short-term picture to be positive.
We would like to see a clear break above the 81.75 barrier to be confident about larger advances. That barrier provided resistance on Nov. 16. The bulls could then get encouraged to push the action towards the psychological figure of 85.00, near the high of Nov. 9, or towards the 85.75 zone, marked by the peak of Oct. 25. If they are unwilling to stop there either, we could see them climbing towards the inside swing low of Oct. 6, 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 Dec. 20, and we may experience declines towards the low of Jan. 3, at 74.27, or the inside swing high of Dec. 27, at 73.60. If that last barrier cannot stop the slide, its break could see scope for extensions towards the low of Dec. 22, at 70.95, or the low of Dec. 15, at 69.35.
