- WTI crude oil collapses, breaks key zone
- RSI and MACD point to further declines
- Even if the price rebounds, the bears may recharge
- A break above 80.90 could shift the outlook to positive
WTI crude oil fell sharply yesterday, breaking below the key support (now turned into resistance) area of 76.50. The tumble confirmed a lower low on the daily chart, confirming that the downtrend marked by the trendline drawn from the high of April 12 is still in force.
Both the RSI and the MACD are detecting negative momentum, implying that further declines may be looming. The former has just ticked below its 30 line, while the MACD is lying below both its zero and trigger lines.
The price is currently headed towards the 71.35 support, marked by the low of February 5, from where it could rebound given the overstretched and sharp collapse. However, the bears could still take the reins from below the 76.50 zone and push for another leg south. A break below 71.35 could target the 69.20 or 67.75 barriers.
On the upside, a break above 80.90 and a return above the uptrend line taken from the low of December 13 may be needed for the outlook to brighten again. Such a strong recovery may encourage extensions towards the peak of April 26 at 84.90.
To sum up, WTI crude oil collapsed yesterday, breaking below a key support zone and signaling the resumption of the prevailing downtrend. Even if the price rebounds somewhat due to the stretched fall, the outlook could stay overly bearish.
