Key Takeaways:
West Texas Intermediate crude oil traded around $97 per barrel on Monday, stalling below the key $100 level as technical indicators suggest the recent rally is losing momentum.
"The setup leans somewhat cautious to bearish, as much of the known risk may already be priced in," Doug Busch, senior technical analyst at Barron’s Investor Circle, said in a note Monday.
The daily chart for WTI crude shows a series of warning signs. After a volatile session on March 9 that may have marked a buying climax, the Relative Strength Index (RSI) has been declining, indicating weakening price momentum. While bulls successfully defended the $80 level on April 17, multiple bearish engulfing candles and dojis have formed between March 16 and April 7. This action has created a potential double top near $120, a significant resistance level.
On a longer-term monthly basis, the chart is holding above a double bottom pivot of $95.13. However, the recent tops near $120 could also be forming a larger double top with the peak from March 2022. Analysts suggest breaking the very round $100 number will be difficult, with a potential move back toward the mid-$80s in May.
WTI crude remains a critical barometer for global economic activity, influencing everything from corporate margins to central bank policy. Its price has become increasingly relevant to the AI buildout, where rising energy costs could pressure the rapid expansion of data centers.
The cautious technical picture comes as geopolitical risk remains high. The seizure of two ships by Iran in the Strait of Hormuz and stalled peace talks recently pushed Spot Brent Crude Oil above $100, driving a flight to the U.S. Dollar. However, the inability of WTI to hold gains above $100 suggests that these factors may be fully priced in, with technical resistance now overwhelming the fundamental drivers.
This article is for informational purposes only and does not constitute investment advice.
