Oil Price Analysis: WTI bounces off $40.50 but there are still bearish technical signals

• WTI is trading 0.50% lower on Thursday but the price found support at USD 40.50 per barrel.
• There has been a key trendline break that is still intact. 

WTI 4-hour chart

WTI has pulled back from the session lows on Thursday as bulls stepped in at a decent support zone. Despite a draw in both API and DoE inventory levels, the price fell yesterday as the market seemed to pricing in more of an impact from Hurricane Laura. The OPEC+ group have also started to taper their production cuts and this could also be putting pressure on the oil price.

Looking at the chart, the price broke the black trendline on Wednesday. Since then the bears took the price thought the USD 42 per barrel support area and this could be the next resistance zone. Looking ahead, if the red support area breaks there could be a more pronounced move to the downside and beyond that the purple line just below USD 39.50 per barrel could stem any further losses.

The Relative Strength Index indicator is currently pulling away from the oversold zone. This could mean there is slightly more legs left in the recovery before the underlying move down continues. The MACD histogram is red and the signal lines are under the midpoint. This is also a bearish signal and confirms the general bearish tone. 

If the US dollar strength continues there could be more pain to come for the oil bulls. Tomorrows NFP result could also have an impact and inspire some volatility so keep an eye on that.

Additional levels