Bulls target $41 mark amid a potential bull flag

  • WTI bulls consolidate before the next push higher.
  • A test of $41 is on the cards amid a favorable technical view.
  • US oil trades above all major hourly SMAs ahead of API data.

WTI (August futures on NYMEX) is consolidating Monday’s nearly $2.5 recovery rally, as the bears continue to guard the 40.00 barrier in Asia this Tuesday.

The retreat, however, remains limited by the risk-on market mood and expectations of a fall in the US crude stockpiles from record highs. The American Petroleum Institute (API) is due to publish its weekly crude stocks change data later today at 2030 GMT.

From a near-term technical perspective, the US oil has charted a bullish flag formation on the hourly chart, with the pattern breakout to be confirmed only on an hourly closing above the 39.65 level.

A bullish breakout would open doors towards the test of the 41 handle and beyond, given the length of the flag pole equating to about $2.30. The hourly Relative Strength Index (RSI) is trading around 60.00, suggesting more room for upside should the bulls regain control.

The path of least resistance appears to the upside, as the black gold trades well above all the major hourly Simple Moving Averages (HMA).

Meanwhile, any pullback could meet fresh demand near 39.20/39.00 region, the confluence of the falling trendline support, horizontal 200-HMA and upward sloping 100-HMA.

Further south, strong support is located at 38.75, where the 100 and 50-HMAs intersect.

WTI hourly chart

WTI additional levels