WTI crude oil may break out of its uptrend!

The morning does not start well for risky assets. The U.S. dollar and the Japanese yen definitely reign supreme in the market. Stocks and commodities, including oil, are being sold off. WTI crude is losing more than 1% today, which may be related to the problems of Chinese developers who are having trouble paying their obligations. This, in turn, raises concerns about the entire Chinese economy, which for many years has relied precisely on the construction market. 

It is worth noting a very interesting thing on the technical side. The 200-period average is falling, while the 50-period average is rising, and it is likely that the two averages will intersect in the coming days. Theoretically, when the fast average crosses the slow average from below, this is a bullish signal indicating a change in trend. However, it is worth remembering that the averages themselves, especially such long-term averages, are a strongly lagging indicator. The last time they crossed, in September 2020, the price fell more than 15% from its peak, while it has fallen 12% since the crossing of the averages. At that time, the price also fell into a 2-month consolidation and new local peaks were reached only after 2.5 months. 

Theoretically, counting from the last high, 15% of the downward movement falls around the level of $71.5 per barrel, which is below the most important support at $74.5 at the retracement of 61.8% of the last upward wave. 

Source: xStation5