USOil Consolidation Above $76.90 Signals Potential Rebound

Market Analysis – May 24

In April, USOil (WTI) experienced a pronounced bearish shift in its market structure. After climbing to the supply zone at $87.50, the price pulled back to a critical bullish confluence region for support. However, the support from the demand level and the ascending trendline was insufficient, leading to a significant price drop. This decline has currently paused at the $76.90 demand level.

USOil Key Levels

Demand Levels: $76.90, $72.10, $69.10
Supply Levels: $87.50, $94.50, $97.69

Long-Term Trend: Bullish

The long-term trend for US Oil has been bullish since January, following the emergence of a reverse head and shoulders pattern. The Williams Smoothed Heikin Ashi candles supported a price rise to $87.50. However, upon reaching this resistance level, the Relative Strength Index (RSI) revealed the market was overbought, with the oscillator climbing above the 70 mark. This overbought condition was succeeded by daily candles dropping below the Smoothed Heikin Ashi candles, which confirmed a reversal.

A bullish confluence zone at $81.20, characterized by a bullish order block, initially provided support and halted further declines. However, this support was short-lived as the price broke through the zone, indicated by the emergence of three black crows, signaling additional bearish momentum. Consequently, the price fell to $76.90.

Short-Term Trend: Bullish

Since late April, the market has been consolidating above the $76.90 level. The RSI remains below 50, indicating a continued bearish trend. Nevertheless, a pullback to the mitigation block at $81.20 is anticipated, which could help larger market participants offset short positions against the $79.90 level.

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