Oil prices stabilized in February. WTI Crude oil rallied from a 43.57 low on the year up to 54.24 before being trapped in a sideways mode.
The 4H chart shows that it has been in somewhat of an ascending triangle. However after failing to breka above 54.25 three times, it looks like it is capitulating today as price plunged below 50 and is now breaking below the ascending triangle support. The 4H RSI has clearly broken below 40, showing loss of the bullish momentum. Price is now threatening to break below the cluster of 200-, 100-, and 50-period SMAs, which would revive the bearish bias.
If price pull back up but fails to limb back above 51, the bears would likely be in control of the market, and the pressure would be back towards the 43.60 area.
If price pulls back above 52, WTI Crude would be back above the moving averages, and the consolidation scenario would likely be extending with short-term upside towards 54.24 with risk of breaking higher.
Brent Crude has also been consolidating, rallying from a low on the year at 45.23 to 63 this week before retreating. The bullish structure in the short-term is still intact, but clues from WTI Crude price action suggests the support levels are vulnerable. Still, a break below 54.00 might be needed to revive the bearish outlook and put pressure first towards the 48-50 price range (common level from mid-January to the end of the month). Then, below 48.0, the 45.23 low would be in sight, with risk of Brent Crude breaking lower in continuation of the prevailing downtrend heading into the year.
If price manages to climb back above 60 however, the bearish scenario might need to be shelved for a longer period of consolidation before we can see whether oil prices still have further downside risk.
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