The price of West Texas Intermediate oil remains under pressure and traded close to its lowest trading level since July 20 this week, due to a surprise build in U.S. crude stockpiles and a much worse than expected ADP report, which came in almost half the markets expectations.
WTI has been dropping all week due to worries about the spread of the coronavirus Delta variant, and the overwhelming feeling that it could severely weigh on global energy demand.
The more-infectious Delta variant threatens areas with low vaccination rates and strains healthcare systems in the United States, which aside from China, is considered to be the engine of global economic growth and consumption.
Traders are closely watching the 100-day moving average for West Texas Intermediate as technical buying and fresh reports of increased Mideast geopolitical tension are causing this key support area to hold.
On the technical front WTI is oversold in the short-term horizon according to RSI and CCI indicators. It is possible that if the Non-farm payrolls report comes in around expectation then a rebound in oil prices could take place.
Market sentiment towards WTI oil shows a worrying one-way bias, with the ActivTrader market sentiment tool showing that 93 percent of traders are bullish towards WTI oil. This large one-way sentiment skew is very bearish, and it suggest that crude oil could falter further. Overall, until sentiment starts to drop significantly watch out for the decline to continue.
WTI Oil Short-Term Technical Analysis
The four-hour time frame shows that WTI oil has formed significant amounts of bullish price divergence across the CCI indicator, following the huge price decline over the last few days.
Watch out for a strong bounce towards the $76.00 resistance level if a recovery starts to unfold. A break under the $68.00 support level could lead to further downside towards the $62.00 price zone.
WTI Oil Medium-Term Technical Analysis
Looking at the daily time frame WTI oil is testing towards its key 100-day moving average. This is a key reversal of breakdown level that traders need to watch over the coming days.
Traders should be aware that a bearish triple top pattern is in play while the price is capped below the $74.50 level. Overall, the trend remains bullish, and dip-buying is probably the best medium-term strategy while the price trades above its 100-day moving average.