Heads up, crude oil traders!
A reversal might be in the cards for this commodity, and this pullback could provide an opportunity to catch the new trend.
Check out these levels I’m watching on the hourly chart.
WTI Crude Oil (USOIL) 1-hour Chart by TradingView
WTI crude oil has been in selloff mode recently, thanks to a combination of risk-off flows and weaker demand expectations.
It didn’t help that a surprise build was reported by the American Petroleum Institute, as private inventories rose by 483K barrels in the week ending January 12. Analysts had expected to see a draw of 2.4 million barrels.
This suggests that the Department of Energy might also report similar results, keeping oil traders wary of weaker consumption trends, especially since the EIA already printed a surprise increase in stockpiles last week.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on crude oil, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Right now, WTI crude oil might be waiting on the EIA figures to determine whether or not it’s about to gain traction on the selloff.
As you can see from the chart above, the commodity already fell through its rising channel support and is pulling up for a retest of the former floor.
This happens to line up with the 38.2% Fibonacci retracement level and pivot point level ($72.70), as well as the dynamic inflection points at the moving averages. A higher pullback could still test the 50% Fib near the $73 per barrel major psychological mark.
If any of these hold as a ceiling, crude oil could resume the slide to the swing low at $70.77 per barrel near S1 ($70.20). Sustained bearish momentum could even take it down to S2 ($67.65).
Note that Stochastic has just reached the overbought region to signal exhaustion among bulls, so turning lower would confirm that bears are taking over.
In any case, make sure you practice proper risk management and keep a close watch on changing market sentiment when trading this one!
