Will WTI Crude Oil drop 30% from long-term resistance?
Since the lows of the pandemic in March 2020, the price of West Texas Intermediate (WTI) crude oil - an international benchmark - has risen more than 500%.
However, the price of WTI crude oil is now trading at historical resistance where buyers have struggled to break through before. This opens the doorway for short sellers to take control of the market.
In the long-term price chart of WTI crude oil below, it’s clear to see the descending trend line which has formed from the highs of 2008, 2013, 2014 and 2018.
Source: Admirals MetaTrader 5, CRUDOIL, Monthly - Data range: from Jan 1, 2007, to Mar 25, 2021, performed on Mar 25, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
With concerns surrounding the lack of supply of coronavirus vaccines around the world and some countries - most notably in Europe - moving into a third lockdown, risk assets like oil have already taken a hit.
Traders may wait for bearish price action to form at the end of the month to confirm the struggle from buyers to break through this historical level of resistance and then move down to the lower timeframes for possible entries.
The weekly chart below also shows another historical resistance level that is in focus. The black horizontal resistance line, shown in the chart above, converges with the long-term descending trend line from the monthly chart shown previously.
Source: Admirals MetaTrader 5, CRUDOIL, Weekly - Data range: from Jun 11, 2017, to Mar 25, 2021, performed on Mar 25, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
Sellers have already managed to step into the market and drive price lower. If the market moves to the next level of support around the ~$45.70 price level, this would record a 30% drop from the highs of the year so far.
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