- WTI broke above $79.00, but RSI and MACD point to overbought conditions.
- China announced the application of economic stimuli to strengthen local demand.
- All eyes are now on Wednesday’s Federal Reserve (Fed) decision.
West Texas Intermediate (WTI) posted a four-day winning streak on Tuesday, but the upside could be capped as technical indicators start to show overbought conditions. Chinese economic stimuli supported oil prices, while markets’ attention shifted to the Federal Reserve’s (Fed) decision on Wednesday.
Earlier, the Chinese news agency Xinhua reported that the Politburo – the highest decision-making body of the ruling Communist Party – announced that it will undertake economic policy adjustments to boost domestic demand and bolster confidence. Since China is the world’s largest oil importer, a stronger local economy would boost energy prices, raising the price of black gold.
On the other hand, all eyes are on the decision of the Federal Reserve (Fed) on Wednesday. Markets expect Chairman Powell to offer a 25 basis point (bp) hike to 5.25% and a data dependent message. According to several analysts, given that the US economy is holding up and the labor market continues to show tension, the Federal Open Market Committee (FOMC) will not feel as comfortable ruling out a further hike beyond July. In this regard, the messages of Powell’s monetary policy statement and press conference will be key.
technical levels
According to the daily chart, the rise of WTI may be limited as indicators jump towards overbought conditions. The Relative Strength Index (RSI) is in positive territory near 70.00, while the Moving Average Convergence Divergence (MACD) prints green bars since late June, suggesting that a downward correction may be on the horizon. That being said, the overall outlook for WTI is bullish as it lingers above its main 20,100 and 200-day SMAs and the crossover between the 20- and 100-day SMAs suggests that the bulls are in command.
Resistance levels: $80.00, $81.00, $82.60.
Support levels: $76.75 (200-day SMA), $73.90 (20-day SMA), $73.50 (100-day SMA).
WTI daily chart
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
