WTI Crude Oil Hits Rising Channel Midline, Rejection Looms

WTI crude oil has recovered strongly from its recent lows around $88-$90 but now faces a crucial test as it approaches the middle of its rising channel. On both daily and 4-hour charts, price has reached this key area and is experiencing its first clear rejection.

This does not necessarily mean that the overall bullish trend has reversed, as the higher-timeframe structure remains intact and shows a sequence of higher lows and higher highs since June's low. The long-term descending trendline was broken above in July, and price has remained comfortably above the 200-day SMA at around $81.25.

However, the rejection at the middle of the channel is a significant development that warrants close attention. If WTI can break through $96.66, retest the area, and hold above it, the next targets become $100 and eventually the previous high around $107.41. But if the rejection continues and price falls back below $93-$94, a move toward $90-$91 becomes possible.

The author notes that a move toward the lower channel would not necessarily mean that the bullish trend is over, as buyers could step in again to propel price back into the middle or upper part of the channel. A deeper correction could also retest the breakout structure above the old descending trendline from March's high.

The latest EIA report showed a bearish signal with U.S. commercial crude inventories rising by 3.0 million barrels, while geopolitics remains a wildcard due to ongoing supply concerns and insurance costs around Hormuz.