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  • WTI drops amid risk-off mood, bearish technical set up.
  • Risks remain to the downside, with eyes on $38 ahead of EIA.
  • Hourly RSI points south, probing the oversold zone.

WTI (futures on NYMEX) is looking to extend Tuesday’s sell-off, as bears gear up for a test of the $38 level amid broad risk-aversion and a potential bear pennant breakdown on the hourly chart.

Tuesday’s over 3% drop and the subsequent consolidation carved out a bear pennant formation on the said time frame, with the price now teasing a breakdown, as we write.

An hourly closing below the rising trendline support at $39.01 could validate the pattern, exposing the target measured at $38.

Ahead of that level, Tuesday’s low of $38.53 could test the bears’ commitment. Backing the case for more declines, the hourly Relative Strength Index (RSI) edges lower, currently at 33.51, probing the oversold territory.

Alternatively, the bearish 21-hourly Simple Moving Average (HMA) at $39.15 could limit immediate bounce from lower levels.

Robust resistance around the $40 mark is the level to beat for the bulls. The 50 and 100-HMA approach each other at the level.

WTI hourly chart

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WTI additional levels