WTI Futures’ Bearish Course In Play, Downside Risks Stand

WTI oil futures have been drifting downhill for the last two-weeks from the 83.28 high, producing lower highs and lows, reinforcing the bearish outlook. The 200-period simple moving averages’ (SMA) positive incline has softened, while the diving 50- and 100-period SMAs are endorsing the descent in the commodity.

The Ichimoku lines are indicating that downward forces remain active, despite the uptick in the red Tenkan-sen line, while the short-term oscillators are conveying conflicting signals in directional momentum. The MACD, deep in the negative zone, is above its red trigger line but looks set to steer back below it, while the RSI’s marginal improvement in the bearish region seems questionable. The fresh negative charge in the stochastic oscillator is sponsoring the resumption of the down trend in the black liquid.

If sellers maintain the upper hand, initial downside constraints could arise from the 74.75-75.31 support base. If the price slides beneath the seven-week low of 74.75, it may snag at the 74.21 low before stretching to test the 72.80-73.13 support border. If this obstacle fails to halt the decline from gaining pace, the price could then target the September 23 low of 71.60.

On the other hand, if buyers manage to nudge the price over the red Tenkan-sen line at 76.13, resistance could commence around the blue Kijun-sen line, currently residing at the 77.14 nearby high. Recouping some previously lost ground, the bulls may meet the approaching 50-period SMA at 78.20 ahead of the Ichimoku cloud and a resistance zone formed between the 79.00 handle and the 100-period SMA at 79.51. Successfully overcoming this tough barrier and the cloud, the bulls could then gain confidence and aim for the 80.55-80.92 resistance band, the former being the flattening 200-period SMA and the latter the November 11 high.

Summarizing, WTI oil futures are exhibiting a sturdy bearish bias and a decisive break below the tough base of 74.75-75.31 would give extra credence to the drop in the commodity. That said, for the bulls to regain some confidence, the price would need to climb above the 79.00 hurdle and adjacent 79.31 high.