West Texas Intermediate (WTI), futures on NYMEX, have extended their Tokyo gains above $85.00 and are oscillating above the same comfortably. The oil prices are still inside the woods, auctioning in a charted territory of $83.56-86.15 from Monday’s trading session.

In doing so, the black gold snaps a four-week downtrend while bouncing off the convergence of a 100-SMA and a two-week-old descending trend line.

From a technical perspective, the commodity manages to defend the $84.50-$84.25 confluence comprising the 100-period SMA on the 4-hour chart and the 50% Fibonacci retracement level of the $76.08-$92.63 rally. The said area should now act as a key pivotal point, which if broken decisively will set the stage for an extension of the recent sharp pullback from the highest level since August touched last week.

In the meantime, any subsequent move up is likely to confront some resistance near the $85.70-$85.75 region. This is closely followed by the $86.00 mark and the 38.2% Fibo. level, around the $86.30 area, above which spot prices could climb to the $87.00 round figure. The momentum could get extended towards the $87.45 hurdle en route to the $88.00 mark and the 23.6% Fibo. level, around the $88.55-$88.60 supply zone.

On the flip side, weakness back below the $85.00 round figure might continue to find decent support near the $84.50-$84.25 confluence. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for additional losses. WTI crude oil prices could then weaken below the $84.00 mark and test the next relevant support near the $83.40-$83.35 region before eventually dropping to the $83.00 level.

WTI Has Provided the First Bullish Impulse

Oct 18 2022