WTI Price Analysis: Hits 7-week low, potential bull RSI divergence on 1H
- WTI oil dropped to seven-week lows in Asia, extending Wednesday's 3.73% slide.
- An hourly chart indicator is beginning to diverge in favor of the bulls.
WTI oil fell to $55.68 soon before press time, the lowest level since Dec. 3, having declined by 3.73% on Wednesday.
The black gold has found acceptance below $56.60, which is the 61.8% Fibonacci retracement (one of the golden ratio) of the rally from $51.03 to $65.62.
The 5- and 10-day averages continue to trend south, indicating strong bearish momentum. Further, the daily chart is reporting a lower highs, lower lows setup.
As a result, the path of least resistance is to the downside. However, a minor corrective bounce may be seen before a potential drop to or below $55.00, as the hourly chart relative strength index is beginning to diverge in favor of the bulls.
The indicator is holding above the low of 16.97 registered on Wednesday, contradicting oil's drop to a fresh seven-month low of $55.68.
WTI could rise to $56.20 and may extend gains to $56.50. A rejection at these levels will likely recharge engines for a sell-off toward $55.00.
Also, a bullish reversal would be confirmed if and when prices rise above $59.61 (Jan. 20 high), invalidating lower highs setup on the daily chart.
Trend: Bull divergence