Technical resistance and overbought short-term indicators are setting of more red lights on Brent and WTI charts as we head into the week’s end.
Oil traded with lots of noise overnight, but ended the session becalmed, with both contracts closing within 30 cents of their opening levels. This has been the picture since Tuesday in fact, with decent intraday volatility but with both Brent and WTI almost unchanged as we enter the last day of the week.
Of more concern is the technical picture for crude with WTI failing for the 4th day in a row below 58.00 and Brent unable to break its double daily top at 64.85. Brent, in fact, has tested and failed ahead of this level every day this week. Worryingly, both the Brent and WTI daily Relative Strength Index’s (RSI’s) remain at extremely overbought levels. When combined with the multiple day failures at resistance this week, the technical analysis picture is painting a very cautious picture for bullish oil positioning ahead of the weekend.
Brent crude is 20 cents higher from its New York close, at 64.20 in early European trading. Resistance is now clearly marked at the 64.80/65.00 area with a break implying further gains to 66.00. Support is at 63.10 and 62.50 with a failure there opening up a much deeper correction to 60.00.
WTI spot is unchanged at 56.95 and needs to capture the 57.80/58.00 region to inject new life into the bullish trend. A daily close above this level sets up a test of 60.00 and 61.00. Support is at 56.20 followed by 55.50 and then 53.70.