WTI Oil – Bears pause after a 4.3% weekly drop

WTI oil prices are consolidating narrowly early Monday, following a sharp decline on Friday (down 2.8% for the day) and a weekly loss of 4.3%—the biggest weekly drop since the last week of April.

Oil closed below $80 on Friday for the first time in five weeks, with the near-term outlook weighed down by large bearish candles from both Friday and the week.

Friday’s drop found support at the 200DMA ($78.62), with oversold conditions on the daily chart prompting traders to engage in partial profit-taking.

The oil price was pressured by weaker-than-expected economic data from China, fueling concerns about lower demand from the world’s second-largest economy.

The market’s focus is now shifting to the Federal Reserve, amid growing expectations that the US central bank will provide firmer signals on the timing of the start of the monetary policy easing cycle during the policy meeting on July 30/31, with September seen as a possible start for cutting interest rates.

The technical picture on the daily chart remains predominantly bearish, with corrective upticks expected to be capped by the psychological $80 barrier (also the daily cloud top) to keep bears in play for further weakness below pivots at $78.62/48 (200DMA / 50% retracement of $72.46/$84.50).

Caution is advised on a break above $80, which would sideline immediate bearish sentiment, but a stronger acceleration higher and a regain of the $81.60/$82.00 zone will be required to revive bullish momentum.

Resistance: 79.55; 80.00; 80.84; 81.16
Support: 78.62; 78.48; 77.06; 76.13