West Texas Intermediate (WTI), futures on NYMEX, have extended their recovery above the immediate resistance of $75.80 in the early Asian session. The oil price is exposed to the critical resistance of $76.00 as investors are optimistic about the release of the Caixin Manufacturing PMI data, which is scheduled for Wednesday.

A daily closing beyond a two-week-old descending resistance line, around $27.30 by the press time, becomes necessary for the WTI crude oil buyers to keep the reins.

Volatility in the US Dollar Index (DXY) has squeezed dramatically, however, the upside is still favored as Fed policymakers are reiterating a hawkish stance to tame the stubborn inflation.

On a four-hour scale, the oil price has formed a Head and Shoulder chart pattern that conveys a sheer consolidation and results in a downside break after surrendering the neckline. The neckline of the aforementioned chart pattern is plotted from January 5 low at $72.64.

The 50-period Exponential Moving Average (EMA) at $76.65 is barricading the oil price, at the time of writing.

Meanwhile, the Relative Strength Index (RSI) (14) has delivered a range shift move from the bearish range of 20.00-40.00 to the 40.00-60.00 range, indicating a bullish reversal. The RSI (14) has taken support at 40.00.

A responsive buying in the oil price favors an upside to near February 3 high around $78.18 and round-level resistance of $80.00 after surpassing a four-day high around $77.00 decisively.

In an alternate scenario, a confident break below the H&S neckline will drag the asset towards December 9 low at $70.27 followed by September 2021 low around $67.00.

WTI still in mood for further recovery

Feb 28 2023