WTI oil futures in extreme downfall; bearish and oversold
Oil price opened 11% lower on Monday and at a multi-year low of 27.32, though not far from 2016 troughs.
Technically, the market is strongly oversold as the RSI is printing new lows below 30, increasing the case for a price reversal. That said, the indicator has yet to change direction and head north and the MACD continues to decelerate below its red signal line, suggesting that things could worsen a bit before getting better.
Below the 27.32 low, the 261.8% Fibonacci of the upleg from 50.51 to 65.61 at 26.00 could potentially halt the bears before the 24.00 barrier comes into view.
Should a rebound take place, with the price closing above today’s high of 33.53, resistance could emerge within the 41.00-42.53 support area, a break of which could see the re-test of the 44.00 number. Higher, the bulls would seek a closure above the descending trendline that has been capping upside corrections since January.
In the bigger picture, the sentiment switched to bearish following the plunge below the 2018 low of 42.53 and only a bounce back above that threshold could resume the neutral outlook.
Summarizing, WTI crude futures could maintain a bearish tone in the short-term. However, any negative extension could be limited as the market seems to be trading well into the oversold territory