- WTI is erasing overnight bounce amid risk-off tone in the global markets.
- Oil's daily chart shows a bearish reversal pattern.
Oil is feeling the pull of gravity alongside losses in equities and increased haven demand for the US dollar, gold, and yen.
West Texas Intermediate (WTI) crude, North America's oil benchmark, is trading near $37.80 at press time, having put in a high of $38.46 during the early Asian trading hours.
The overnight bounce from $37.31 to $38.46 is being reversed amid price-negative developments on technical charts.
To start with, Wednesday's 5.85% drop validated bearish reversal signaled by Tuesday's Doji candle. In addition, Wednesday's decline confirmed a bearish divergence of the 14-day relative strength index.
A bearish divergence occurs when the indicator charts lower highs, contradicting higher highs on price. The pattern usually occurs after notable price rallies and often precedes notable pullbacks.
The black gold could suffer deeper losses in the short-term. The immediate support is located at $34.36 (June 15 low), under which major support is located at $32.29 (100-day simple moving average).
On the higher side, a move above the June 23 high of $41.63 is needed to restore the bullish trend from April lows below $10.
Daily chart
Trend: Bearish
Technical levels
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