WTI crude oil prices fell on rising expectations for a ceasefire agreement in the Middle East and an increase in US crude oil inventories, posting a third consecutive day of red.
Also, persistently high U.S. inflation continues to dampen expectations for interest rate cuts, adding to concerns that demand may weaken further.
The daily chart shows increasing negative signals as the bearish momentum strengthens and the price dips below the 10/20/55 DMA and the action is about to complete a failed swing pattern.
Price hit a 5-week low in early trading on Wednesday, putting pressure on major support at the $80.00 zone (38.2% of the psychological/Fibo index $67.70/$87.61/200DMA/top of the rising daily cloud) I’m putting it on.
The bears are likely to face further headwinds here, but the overall picture is negative, with the U.S. central bank holding interest rates on hold today and the widely expected decision to keep rates high for an extended period of time. This could further worsen the demand outlook.
A sustained break out of the $80 zone would generate a strong bearish signal for a deeper correction of the December/April $67.70/$87.61 rally, with a target of $77.86/66 (100DMA/50% retracement) will be exposed.
The broken 55DMA ($81.33) marks the first resistance level ahead of the 10DMA ($82.46) drop and the $83.99 (20DMA) upper breakpoint.
Resolution: 81.33; 82.46; 82.91; 83.99.
Sap: 80.00; 79.27; 78.90; 77.86.
