- Spot WTI drops over 1% on Tuesday after testing the USD 40 per barrel level.
- There is an ascending wedge pattern on the hourly chart which is currently being tested.
Spot WTI 1-hour chart
Looking at the hourly chart below, the price has hit the psychological USD 40 per barrel mark and sold off quickly. One of the key features on the chart is the ascending wedge formation and at the time of writing the bears are testing the zone. If the wedge pattern does break the price could move to lower levels.
The next support zone is the black horizontal line just above USD 38.50 per barrel. Beyond that, the next support is slightly stronger at the blue level near USD 37 per barrel as it has been tested more times. On the upside, the bulls were not able to test the green level but watch out for it in the future as it could be important later on down the line.
The Relative Strength Index indicator made a lower high wave as the market made a higher high. This is called bearish divergence and could have been an early signal for a loss in momentum. The MACD histogram is in the red and the signal lines are still above the mid-point. This is conflicting and if the signal lines do dip below the mid-point it could spell trouble.
On the higher timeframes, the price is still in an uptrend. This whole move could just be a retracement but if the support zone at USD 37.17 per barrel breaks it could be the start of a trend change.
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