Crude Oil Head and Shoulders Pattern Spells Trouble for WTI Prices

WTI crude oil may be forming a head and shoulders pattern on its daily chart. This technical formation is characterized by a lower high after a peak, with the left shoulder at $80 in mid-July, the head near $86, and the right shoulder capping out closer to $84.

The neckline of this pattern aligns with a rising trend line that has been supporting price since mid-July. This trend line currently sits just above the $79 mark near the recent low of $79.72. A break and close below this neckline could complete the pattern, potentially leading to a measured move selloff.

Moving averages are also reinforcing the bearish case, with the 100 SMA crossing below the 200 SMA. The gap between these two moving averages continues to widen, indicating that the path of least resistance has shifted to the downside.