Oct 25, 2022
VOT Research Desk
The recent failure of crude oil to move beyond significant resistance levels increases the likelihood of an extended sideways range.
Despite many efforts in early 2022, WTI crude oil was unable to definitively surpass the 2011 high of 114.83 on the monthly continuous contract charts.
Additionally, the Moving Average Convergence Divergence (MACD) indicator’s bearish crossing indicates that the medium-term rising pressure has considerably diminished (though still bullish as MACD remains in positive territory).
Positive territory bearish crosses indicate that bullishness is waning but are not obviously bearish, and vice versa .
The 200-day moving average of crude oil has retreated from near strong resistance at the same time, almost coinciding with a horizontal trendline from March at around 94.00 on the daily charts.
Additionally, there is no bearing as evidenced by the fact that the Plus Directional Movement Index (DMI) and Minus Directional Movement Index, which are indicators of trend direction, are both below the 25-point level. The Plus DMI indicator often rises over 25 in a bullish market and rises above 25 in a negative market. When the Plus and Minus DMIs are equal to or less than 25, the market is sideways.
The path of least resistance for oil remains sideways to downward until it can move above the 94-97 region
which includes the 200-day moving average). The September low of 76.25 provides immediate support on the downside. The 200-week moving average provides more stability (now at about 64.00)
