FX.co ★ CL/Crude Oil

The WTI crude oil is still stuck in a negative market. Prices are trading far below new medium-term highs and are unable to develop a sustainable base. The trend is very evident in the form of decreasing highs and decreasing lows which commenced following the breakdowns of the upper 70s previously in the cycle. Every more recent recovery has struck lower than the past resistance areas, substantiating that upturn moves are mostly remedial. Structurally, the downward trend grew after price had lost the psychological price of 70.00. It then turned into solid opposition after it failed to recover this mark, and cleared the way to the low to low 60s. The current trading of about $60.50 is within a congestion range that traditionally attracts short-term purchasing, however, the absence of vigorous rebounds portrays that the demand is hesitant and responsive as opposed to aggressive. Most recent price developments indicate that WTI is consolidating following its drop below the support area of between 63.00 and 64.00. This area emerges as adjacent resistance, which coincides with recent swing lows and the half way point of the most recent selling leg. As long as price remains capped below this area, the construction of the structure will prefer to reach further down, or at least a long-term sideways correction. Any comeback to this band may be prone to selling, unless momentum and structure are evidently altered. The negative side of the situation is that the level of $60.00 will be the immediate psychological support. Price is staying close to it, and when the repetition is done without a substantial rebound, the danger of a disintegration increases. A close below 60.00 per day would reveal the following support at around 57.50-58.00 which was previously consolidated and reacted. Although this region has the potential to attract short-term purchasers, a downfall would hasten the bearish trend to the mid-50s. A major medium-term support is the range of 55.0056.00. Structurally, it is the previous bottom preceding the final significant upside effort and the bottom of the larger range that was encountered earlier this year. When the price enters this range it is likely to be a battlefield between those who want to purchase a product at a reasonable price and those who want to increase the trend through selling. A decisive break down would affirm the persistence of the bearish cycle and create the possibility of further lower price objectives. To indicate improvement, a corrective market should at least regain the $63.00- 64.00 level. Breaking above this area may enable a further reverse to the level of $66.50-67.00 where the past breakdowns and trend-based resistance are met. At the time, this would still fall under the greater bearish paradigm as long as the price is able to establish higher highs and defend them against resistance zones regularly. The total trend formation shows the lack of powerful bullish candles during the last sessions. The action of the prices is overlapping indicating that they are distributed and not accumulated. This is a typical behavior that is followed by an extended excursion either downwards or an expansion of volatility in the existing direction of the trend that is yet to be on the downside. The technical picture remains weak until the development of a pronounced higher low above a significant support. To conclude, the WTI crude oil is trading in the bearish trend, and it is contained below the important resistance levels and against the psychological support level at or about the price of $60.00. The inability to regain the previously supporting areas strengthens the downside bias, whereas the rebound to the levels of $63.00 and 64.00 is most probably corrective unless otherwise. The medium-term perspective will depend on whether the market will be able to hold the low 60s and new higher low, or lower break revealing lower support levels in the mid-to-low 50s.