Hawkish FOMC minutes, a stronger greenback and higher inventories were enough to push WTI crude back below $70 Wednesday. Momentum suggests the move isn’t over just yet.
By yesterday’s close WTI had suffered its largest slip in 9 weeks. Still, its potential for losses had not gone without warning. And last week we citied 72.98 as a key level for bulls to defend, as the break beneath it has since confirmed a bearish hammer reversal on the weekly chart.
The decline from its 4-year high (76.88) is now on its third leg and shallow retracements underscore bearish dominance. Moreover, momentum on this counter-trend move exceeds that of prior retracements, which raises the prospects of the bullish channel coming under threat. With momentum pointing firmly lower, intraday traders could consider fading rallies below 70.54 resistance with the lower channel as an initial target, and the 66.89 lows if they feel extra grizzly.
For those preferring to stick with the long-term uptrend, the bullish channel from the June ’17 low remain intact so makes a likely area of support (it ain’t broken till its broken). So, should price stabilize and rally from it, we can then revert to bullish setups with the comfort of dominant momentum being on our side.