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Crude Oil Technical Outlook: Pullback at Hand Before Next Leg Higher?

Crude Oil Technical Outlook: Pullback at Hand Before Next Leg Higher?

Thomas Westwater, Analyst

Crude Oil Technical Forecast – Bearish

  • Crude oil prices fade just before testing recent yearly high
  • Bearish RSI divergence signals weakening short-term posture
  • Price may consolidate or pull back before bulls regroup
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Crude oil prices are over 11% higher this month, bolstered by an improving economic outlook, higher global trade activity, and positive OPEC+ developments. West Texas Intermediate (WTI) prices are hovering below the yearly high set last weekat 53.90. Prices looks poised for higher ground, but a short-term pullback may be the most likely course of action before a subsequent rally takes shape.

The 9-period Exponential Moving Average on the 4-hour timeframe supported prices leading up to the 2021 high before fading.An ensuing push upward fell short and WTI proceeded lower. Now, the approaching 9-period EMA may provide support once again for a quick retest, though a period of consolidation appears to be an equally likely short-term outcome.

One point of concern for buyers is bearish divergence between the Relative Strength Index and recent swing highs in crude oil prices themselves. A move down to trendline support from last November would give bears a short-term victory while allowing the broader trend to remain intact, conceding some profit-taking in the process. That said, an extension higher may still be the most likely scenario following a short-term move lower or a period of consolidation.

Crude Oil 4-Hour Chart

Crude Oil Chart

Chart created with TradingView

Crude Oil TRADING RESOURCES

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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