USOil could be about to initiate a freefall

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Updated: 16 October 2020

Hello traders! Back in August, WTI has topped out while hitting a 43.51 high. Then price declined rapidly but found the support at 23.6% Fibonacci retracement level at 35.86. Corrective move-up followed and this time USOil rejected the 50 Simple Moving Average, forming the resistance at 41.44.

Right now, the price of USOil could be stuck between 41.44 resistance and 35.86 support. Today WTI is trading very close to the price where most trading volume has been recorded, which is 39.79. The battle between bulls and bears is ongoing, and considering that USOil could have entered the consolidation phase, and the price is at the top of that range, the probability of the downside wave remains high. Of course, this is only as long as 41.44 resistance is being respected.

Therefore, the nearest support is located at 35.86, which at this point is likely to be re-tested. But the price could be breaking below, which should confirm a strong bearish sentiment and could push the price as low as the 15.00 area, which is an 88.6% Fibonacci retracement level. However, before/if that scenario becomes the reality, 50%, and 61.8% Fibonacci support level must be broken.

Bias: Bearish while below 41.44

Potential Resistance Zone: 41.44 – 42.00

Potential Targets: 35.86, 27.31, 23.48, 14.80

Have a profitable trading!