WTI OIL – consolidation is expected to precede fresh weakness; daily cloud top to cap upticks
WTI oil price is slightly higher in early hours of European trading on Monday after dip in Asia found footstep just above last Friday’s low at $65.49 (also 50% retracement of $58.06/$72.89 bull-leg, supported by 100SMA at $65.31).
Oil price was down $3 in last Thu/Fri fall which closed below former low at $65.79 and attempts to generate fresh bearish signal on completion of failure swing pattern on daily chart.
Negative outlook is supported by bearish techs (daily MA’s in bearish setup and south-heading 14-d momentum) as well as rising production of US shale oil and fears that OPEC and non OPEC oil producers may decide to ease current deal for reduced production.
Consolidation is likely to precede fresh weakness, with broken daily cloud top ($66.86) expected to cap upticks and maintain bearish bias.
Break below $65.49 would expose $64.62 (base of rising daily cloud) and could extend towards $63.73 (Fibo 61.8% of $58.06/$72.89).
Conversely, break and close above daily cloud top would sideline downside risk and signal stronger recovery.
Res: 66.02; 66.86; 67.49; 68.23
Sup: 65.49; 65.31; 64.62; 63.73