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WTI crude oil pulled back from an important support level

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Mar. 3 2015, Updated 1:06 p.m. ET

Multiple tops pattern

A multiple tops pattern could be seen in WTI (West Texas Intermediate) crude oil prices. WTI crude oil prices retreated from the key support level of $48 per barrel of this pattern on February 27, 2015. Sentiments of an improving demand outlook and the consensus of a future supply shortage supported the rise of crude oil prices on Friday, February 27, 2015.

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Pivot points for crude oil

The important support for WTI crude oil is at $48 per barrel, as stated earlier. WTI crude oil prices hit this mark many times in February 2015. On the upside, bullish traders could see resistance at $52–$54 per barrel. Crude oil prices hit this mark multiple times in February 2015.

According to the trading range in the crude oil charts, WTI crude oil could trade at $48–$54 per barrel in the short term. Technical indicators—like the RSI (relative strength index) and MACD (moving average convergence divergence)—suggest a possible sideways trend for crude oil. However, traders should be cautious that crude oil’s long-term trend is in a downward trend. Oil supply glut will always apply downward pressure on oil prices.

However, the recent increase in crude oil prices impacts oil producers’ profitability—like Anadarko Petroleum (APC), ExxonMobil (XOM), and EOG Resources (EOG). It also impacts oil ETFs’ margins—like the United States Oil Fund (USO) and the PowerShares DB Oil Fund (DBO).

In the next part of this series, we’ll analyze the price action of gold and its ETFs.

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