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WTI Crude Oil Technical Analysis - Time for a pullback

While the global economic outlook appears increasingly precarious due to ongoing deterioration in economic indicators from the world's largest economies, Crude Oil is showcasing resilience driven by supply-side dynamics. OPEC+ is making concerted efforts to uphold prices above the $70 mark, and there's speculation in the market that they may target prices near the $100 range.

Just recently, Crude Oil experienced a surge in prices following Saudi Arabia's decision to extend voluntary production cuts until December. It's worth noting that the market had already priced in such a development in preceding weeks.

On the technical front, examining the WTI Crude Oil chart on a daily timeframe, we observe a complex interplay of factors. At present, Crude Oil appears to have some support. However, the prospect of elevated energy prices amidst a fragile global economy may exert pressure on demand, potentially leading to a sell-off, particularly if economies slip into recession.

Examining the daily chart of Crude Oil, a significant development unfolds as the commodity successfully breached the crucial $83 resistance level once more. This time, the price journeyed to fresh highs, driven by a potent and rapid upward momentum. However, it's worth noting that this recent surge appears overextended.

Indeed, the current price position is considerably distant from the blue 8-day moving average. Typically, in such scenarios, one can anticipate either a pullback towards the moving average or a period of consolidation preceding the next significant move.

Furthermore, an interesting observation emerges as the most recent upward leg exhibits divergence with the MACD indicator. Such divergence often signals a diminishing momentum, which can precede pullbacks or even reversals.

Considering risk management strategies, potential buyers might opt for a more cautious approach. Waiting for the price to retrace to the trendline and the former resistance, which now acts as support, could offer a more favourable entry point. The ultimate target, in this case, remains the $93 level.

Switching to the 4-hour timeframe for more granular analysis, one can delve deeper into the dynamics at play in the Crude Oil market.


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