WTI Oil: Breakout Attempt or Failed Pullback?

WTI is in a classic tug-of-war between short-term support and long-term resistance. The price has pulled back from its 2025 low near $54.95, now testing the 1-hour moving average (MA50) as immediate support. This is the first line of defense for bulls; a break below could signal the pullback is turning into a deeper decline.

The immediate ceiling is the 1-day MA200, a key level that has capped every bullish move in the recent bearish trend. More importantly, the market is eyeing a critical resistance zone at $62.545. A decisive break above this area is required to invalidate the prevailing downtrend and confirm a reversal. For now, that level remains the bull's primary target.

The broader structure paints a bearish picture. Price is confined within a clear descending channel, with the trendline acting as dynamic resistance. This channel has been respected consistently, capping rallies and printing lower highs. The latest action shows a strong reaction from a major historical demand zone near 5,780–5,820, where multiple past bounces confirm strong buying interest. That zone now flips to potential support, but the path of least resistance remains down until the 1D MA200 and the $62.545 barrier are conquered.

Momentum Analysis: Buyer vs. Seller Strength

The bounce off the 5,780–5,820 demand zone looks promising, but the momentum tells a different story. The move resembles the start of an 'ABC' correction, where wave 'A' ended at the 2025 low near $54.956. For this to be a true reversal, wave 'B' needs to break decisively above the 1-day MA200 and the key resistance at $62.545. The current action suggests the correction is just beginning, not ending.

On a 1-hour chart, the Relative Strength Index (RSI) is flashing a bearish divergence. It's forming a lower highs trend-line, which signals weakening bullish momentum. This is a classic warning sign that buyers are losing steam. The market is struggling to make new highs on the RSI, even as price attempts to climb. This divergence increases the odds that the recent rally is a temporary relief pull-back, not the start of a sustained bullish reversal.

The critical level to watch is the $62.85–90 zone. This area is the bull's final hope. A sustained break above it would confirm a cut-n-reverse signal and invalidate the bearish structure. However, if price holds below this range, it confirms sellers remain firmly in control. The setup is now a test of wills: buyers need to clear this hurdle to prove their strength, while sellers only need to hold it to maintain the path of least resistance to the downside. For now, the momentum favors the bears.

Key Levels & Targets: The Trade Plan

The setup now hinges on a few critical levels. A break below the 2025 low near $54.956 would confirm the dominant bearish bias is intact. That move would target the major historical demand zone at 5,780–5,820, which has acted as a floor multiple times. For now, that zone is the next support level if the pullback continues.

The primary resistance to watch is the $62.545 area. This is the bull's key level; a decisive break above it is required to invalidate the descending channel and signal a true reversal. However, a rejection here is more likely. The market is already showing signs of weakness, with a short-term decline of more than 3.0% driven by fading geopolitical risk. This de-escalation reduces the supply risk premium that had supported prices, making a failed breakout at $62.545 more probable. A rejection could trigger a sharp drop back toward the 5,780–5,820 zone.

Monitor geopolitical developments closely. The recent easing of tensions in Iran has directly pressured prices by reducing the perceived threat to the Strait of Hormuz. As long as that risk premium stays low, it will cap rallies and favor the sellers. The trade plan is clear: watch for a break above $62.545 to signal a bullish shift, but expect resistance there. The path of least resistance remains down unless that key level is conquered.

Risk Management: Guardrails and Catalysts

The trade plan is clear, but the risk parameters are tight. The main danger is a failure at the $62.545 resistance zone. A rejection there would confirm the descending channel remains intact and likely trigger a sharp drop back toward the major historical demand zone at 5,780–5,820. That area has acted as a floor multiple times, so it represents the next key support level if the pullback continues.

The key bearish trigger is a sustained move below the 2025 low near $54.956. That break would signal the dominant bearish bias is fully intact and could extend downside pressure toward the 5,780–5,820 zone. For now, that low is the critical stop-loss level for any long position. A close below it invalidates the recent bounce and confirms the path of least resistance is down.

On the flip side, the primary catalyst for a bullish shift is a decisive break above the $62.85–90 zone. This area is the bull's final hope; a sustained move above it would confirm a cut-n-reverse signal and invalidate the bearish structure. However, the market is already showing signs of weakness, with a short-term decline of more than 3.0% driven by fading geopolitical risk. This de-escalation reduces the supply risk premium that had supported prices, making a failed breakout at $62.545 more probable.

Watch for any resurgence in geopolitical tensions, as this could quickly re-establish a supply risk premium and challenge the technical breakdown. The recent easing of tensions in Iran has directly pressured prices by reducing the perceived threat to the Strait of Hormuz. As long as that risk premium stays low, it will cap rallies and favor the sellers. The setup is a test of wills: buyers need to clear the $62.545 hurdle to prove their strength, while sellers only need to hold it to maintain the path of least resistance to the downside.