WTI crude oil traded lower yesterday, after it hit resistance at 109.55 on Monday, near the downside resistance line drawn from the high of Mar. 6. Overall, although the black liquid remains below that line, it is also trading above the key support territory of 94.75. Thus, we do expect some short-term declines up until that zone, but for the outlook to become overly bearish, we believe that a clear and decisive dip below 94.75 is needed.
Such a dip will confirm a forthcoming lower low on the daily chart and may see scope for declines towards the 88.65 or 86.45 zones, marked by the lows of Feb. 9 and 1, respectively. If neither obstacle can stop the bears, then we may see them pushing towards the low of Jan. 24, at 82.50.
Shifting attention to our short-term oscillators, we see that the RSI, already below 50, shows signs of turning south again, while the MACD, although slightly positive, lies below its trigger line and looks ready to fall below zero soon. Both indicators suggest that oil could start gaining downside speed again soon, but we stick to our guns that the move which can turn the outlook bearish may be a break below 94.75.
On the upside, we would like to see a clear break above 109.55 before we start examining the bullish case. This could also confirm the break above the downside line taken from the high of Mar. 6, and may pave the way towards the 115.85 level, marked by the high of Mar. 25, or the high of the day before, at 118.20.
If the bulls are not willing to quit near those barriers, then we could see them climbing all the way up to the peak of Mar. 9, at 127.35.
