Oct 18, 2022
VOT Research Desk
Market Analytics and Considerations
Technical indicators for crude oil: WTI crude oil is testing support soon after a significant weekly increase.
Oil could quickly rise to the mid-95s once a low is identified.
The recent week saw a 16% increase in December WTI crude oil futures, a reminder to the market of how quickly oil can change and burn. The pullback that we are experiencing so far is orderly and resembles a corrective sell-off rather than a retreat from the previous move.
The up-move from the September low has been retraced by about half, bringing support that held for most of the summer into play. A solid area is immediately surrounding 84.50.
The December crude (CLZ) has been holding this level for the past few sessions, but the test has not yet been confirmed due to the absence of a strong push off support. A pattern is emerging that has the potential to alter that in the short term.
Over the past few days, price action has taken on the form of a descending wedge that could break at any time. The upward momentum should begin with a clear hourly breakout above 85.53 and a daily close above that level.
The 200-day moving average (MA) at 89.23 is the next level to keep an eye on as resistance. An untested trend line that runs lower than the highs and is located in the 90 areas may not pose a problem. The weekly surge’s high of 92.42 is the next significant swing level. Around 95,
We believe, is the major level that could play a role during the subsequent uptrend.
It will be crucial for the oil to locate a low quickly if support fails here. The current setup will lose its shine because the next level, which could be around 80.49, will require a significant retracement to overcome.
