WTI Crude Oil is currently trading around $64.77, following a recent rejection from the $76–78 resistance zone. This area represents a strong supply zone and coincides with the upper boundary of a long-term descending channel, indicating institutional selling pressure. From a Smart Money Concepts (SMC) perspective, this move appears to be a liquidity grab above previous highs, where price tapped into a bearish order block before aggressively reversing. Price action confirms this bearish sentiment, with a visible rejection and bearish engulfing candle suggesting that sellers are defending the region aggressively.
On the supply and demand side, the $76.77–78.30 zone is the immediate supply zone, while the next key resistance above lies between $79.37 and $93.94. On the downside, demand lies at $58.69–64.00, with major demand and liquidity resting around $55.00 and $51.79. Fundamentally, the recent spike in oil prices was largely driven by heightened tensions in the Middle East, particularly renewed conflict concerns between Iran and Israel. However, as no direct disruption to oil supply has occurred, the geopolitical risk premium is now being priced out. Additionally, concerns over global demand, especially from China and Europe, along with a gradual and controlled U.S. Strategic Petroleum Reserve (SPR) refill, are putting downward pressure on prices despite OPEC+ maintaining output cuts.
Based on this analysis, the trade idea favors a bearish swing setup. A short position around $64.00–66.00 could be considered, targeting $58.69 as the first take-profit level, followed by $55.00 and $51.79 for extended targets. The stop loss should be placed just above $78.50 to allow room beyond the supply zone and trendline. This setup offers a risk-reward ratio of approximately 1:3. However, if price breaks and holds above $78.50, it may signal a structural shift toward bullish momentum, likely driven by unexpected geopolitical escalation or a change in OPEC strategy. In such a case, the bias should flip to bullish, with potential targets around $89.00–93.00.
On the supply and demand side, the $76.77–78.30 zone is the immediate supply zone, while the next key resistance above lies between $79.37 and $93.94. On the downside, demand lies at $58.69–64.00, with major demand and liquidity resting around $55.00 and $51.79. Fundamentally, the recent spike in oil prices was largely driven by heightened tensions in the Middle East, particularly renewed conflict concerns between Iran and Israel. However, as no direct disruption to oil supply has occurred, the geopolitical risk premium is now being priced out. Additionally, concerns over global demand, especially from China and Europe, along with a gradual and controlled U.S. Strategic Petroleum Reserve (SPR) refill, are putting downward pressure on prices despite OPEC+ maintaining output cuts.
Based on this analysis, the trade idea favors a bearish swing setup. A short position around $64.00–66.00 could be considered, targeting $58.69 as the first take-profit level, followed by $55.00 and $51.79 for extended targets. The stop loss should be placed just above $78.50 to allow room beyond the supply zone and trendline. This setup offers a risk-reward ratio of approximately 1:3. However, if price breaks and holds above $78.50, it may signal a structural shift toward bullish momentum, likely driven by unexpected geopolitical escalation or a change in OPEC strategy. In such a case, the bias should flip to bullish, with potential targets around $89.00–93.00.
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