WTI crude oil futures are currently challenging the $74.00 round number, situated within a downward-sloping channel that has been in place since September 28. This technical setup prompts a closer look at key resistance and support levels. The MACD is showing signs of advancement above its trigger line while still within negative territory. The stochastic oscillator remains near the 80 level, suggesting the possibility of an overbought market.
Potential Upside Scenario:
Should the bullish momentum continue, breaching the $74.00 barrier, it could propel prices beyond the descending channel's upper boundary. This would put the flat 200-day Simple Moving Average (SMA) at $77.56 in focus, which coincides with the 50-day SMA. Further upward momentum might lead the bulls to test the $80.00 handle, creating more optimism for a sustained bullish trend.
Potential Downside Scenario:
Failure to overcome the $74.00 resistance level could result in a drop below the 20-day SMA, which currently rests within the $67.90 to $67.10 support range. A move below this significant region would confirm a bearish structure, potentially sending prices towards the $64.20 support level, which is derived from the low observed on May 4.
Crude oil prices are displaying some indications of a bullish correction, but it's crucial for them to break free from the descending channel and surpass the 200-day SMA to establish a more sustained bullish trend.