Technical Analyst, Saxo Bank
Summary: Correction time for Crude oil.
WTI was rejected at strong resistance and Brent formed top and reversal pattern
A 5% correction measured from the peak seems very likely but a larger correction of around 10% could be seen
Medium-term technical picture is pointing to higher Crude oil prices
WTI Crude oil reached resistance at around 93.74 only to get rejected. A correction is now ongoing and is likely to take WTI down at least the 0.382 retracement at 87.58. However, a correction could take WTI down to the 0.618 retracement at 83.77 and the lower rising trendline.
However, the RSI is still bullish with no divergence indicating likely higher oil prices after the correction regardless of the magnitude of the correction.
A close below the rising trendline is likely to demolish the bullish picture.
Medium-term WTI is in an uptrend supported by Bullish RSI and no divergence. A close above 93.74 will pave the road to 104.80 level
Brent Crude oil formed yesterday a Shooting star candle which is an indication of a top and reversal. (Shooting star candle has a small body with a upper shadow at least twice the size of the body and no or very little lower shadow. It is a strong indication of power shifting from Buyers to Sellers thus top and reversal)
A correction seems to have commenced. A correction that should take Brent down to at least the 0.382 retracement at 90.62, but could take Brent down to test the lower rising trend possibly dipping down to the 0.618 retracement at around 87.31.
RSI is showing positive sentiment i.e., Bullish trend and no divergence on both daily and weekly chart strongly suggesting likely higher Brent oil prices after a correction.
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