Place chart

Correction to near $90.00 gives way to smart money

  • Oil prices slipped to near $90.00 as DXY bulls attempted to rally in Asia.
  • The advancement of the 50 and 100 EMA adds to the upside filters.
  • Corrective moves are considered a smart money entry zone in a Rising Channel formation.

West Texas Intermediate (WTI), futures on NYMEX, extended losses in the Tokyo session after giving up immediate support at $90.90. Black gold sparked selling interest as the U.S. dollar index (DXY) showed signs of recovery amid anxiety ahead of the US midterm elections.

On an hourly scale, black gold is auctioned in a rising channel chart pattern that indicates an upward structure. The upper part of the chart pattern is placed from the October 20 high at $86.94 while the lower part is drawn from the October 31 low at $84.78.

The asset corrected back towards the 50-period exponential moving average (EMA) at $90.70, while the 100-EMA at $89.80 is still untouched and is aiming higher, indicating more potential.

Meanwhile, the Relative Strength Index (RSI) (14) has moved into the 40.00-60.00 range and should find support around 40.00.

Looking ahead, a drop near the horizontal resistance placed at Wednesday’s high of $89.66 will present a buying opportunity for market participants. The bulls could lead oil prices to Tuesday’s high of $91.40, followed by Monday’s high of $92.92.

On the other hand, Oil prices could face a sharp decline near Wednesday’s low at $87.00 if they break below the support at the $89.00 round levels. A slide below Wednesday’s low could take the asset to the Oct. 31 low at $84.78.

WTI hourly chart