U.S. crude oil prices continue to recover after revisiting its August lows last week.
How high can WTI crude fly before sellers gather enough bearish momentum?
We’re taking a closer look at a possible resistance area:
In case you missed it, a lack of progress on Gaza ceasefire talks helped pull U.S. (WTI) crude oil up from its August lows near $71.75. It may have also helped the commodity that U.S. data releases and FOMC member speeches are pointing to a rate cut as early as September.
WTI not only bounced from $71.75, but also sustained a bullish momentum all the way to its current prices near $75.25.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on crude oil and market sentiment, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
How high can WTI trade before enough sellers step in to change its direction?
WTI is trading close to the 4-hour chart’s 200 SMA, which was also an area of interest earlier this month. Keep an eye out for bearish candlesticks that may signal a possible bearish reversal from the Black Crack’s latest upswing.
But until we see a potential catalyst, WTI could continue to draw in buying demand. We’re on the lookout for a potential move to the R1 ($76.57) Pivot Point line which is right around the 200 SMA area. More importantly, it’s closer to a descending triangle resistance that hasn’t been broken since early July.
Bearish candlesticks and then selling momentum from the $76.50 – $77.00 area would yield a good risk ratio for those who are expecting WTI to revisit its August lows.
Of course, it’s possible that WTI won’t see sustained selling pressure for days.
If WTI busts through the resistance areas and sustainably sees bullish candlesticks above the $78.00 area, the commodity could make a play for the $80.00 psychological area or the $82.00 previous highs.
Whichever way you decide to play this setup, make sure you practice proper risk management and keep an eye out for major market catalysts coming up!