WTI Crude Oil – A Strong Rebound From the 200 SMA After the Channel Breakdown

 

November 5, 2026 | Daily & 4H Technical Analysis

After several sessions of heavy selling, WTI finally delivered something worth paying attention to. What initially looked like a decisive breakdown of the rising channel has now turned into a surprisingly strong rebound, with buyers stepping in almost exactly at the daily 200 SMA.

My attention is now shifting from the breakdown itself to the quality of today's recovery. The market did not simply bounce and immediately give back its gains. Instead, buyers managed to push prices higher with very little meaningful downside retracement. That is an interesting change in short-term price action, especially after such an aggressive sell-off.

I am not calling the bullish trend restored yet. The channel has been broken, and that remains an important technical development. However, today's reaction suggests that sellers may have taken more than they could comfortably hold, and that the market is not necessarily ready to accept substantially lower prices.

Technical Analysis – The 200 SMA Comes Into Play

Looking at the daily chart, the most important event was the reaction around the 200-period simple moving average. WTI briefly traded down to approximately $86.65, while the daily 200 SMA was sitting around $86.82. The market found buyers in this area and recovered towards $91.20 by the time of my chart update.

This is particularly interesting because the 200 SMA had not been seriously challenged during the previous advance. Its first major test came immediately after the rising channel was broken. For me, the reaction is worth watching, although one bounce alone is not enough to confirm that the long-term trend remains intact.

On the 4H chart, the recovery also looks constructive. The initial reaction from the lows was relatively aggressive, and price managed to regain several dollars without producing the kind of deep pullback that would normally make me question the strength of the buyers.

There is still a significant obstacle ahead: the former lower boundary of the rising channel.

The Potential Retest – A Very Interesting Fibonacci Confluence

This is where the chart becomes particularly interesting to me.

I have been measuring the potential recovery against the recent downswing, and the 61.8% Fibonacci retracement appears to line up quite nicely with the area of the broken channel's lower trendline.

In other words, a move back towards the former channel boundary would also represent a technically meaningful Fibonacci retracement.

I would not be surprised to see WTI attempt such a move. In fact, this is currently one of the scenarios I am watching most closely.

However, there is an important distinction between a retest and a confirmed breakout. The former support could now become resistance. If buyers manage to reclaim the channel and hold above it, the structure would look considerably healthier. If the price is rejected there, we could simply be looking at a corrective bounce within a newly bearish short-term structure.

For now, I prefer to let the market show its hand rather than anticipate the outcome.

Midterm Elections – Did Anything Actually Change?

I think it is important to put the recent sell-off into its political context. A significant part of the bearish move was driven by uncertainty surrounding the US midterm elections and the possibility of a major change in Washington's approach to the war with Iran.

The Democrats' sweeping victory, including gaining control of both chambers of Congress, immediately changed market expectations. Investors started pricing in a greater possibility of diplomatic negotiations, pressure on the administration to end the conflict and a reduced appetite for further military escalation.

But here is something I think the market may be getting ahead of itself on: what has actually changed on the ground?

The answer is: not very much, at least not yet.

The newly elected Congress will not take office until January 2027. Until then, the current Congress remains in place. And even after January, a Democratic majority does not automatically give Congress control over the President's foreign policy or military decisions. It can increase political pressure, investigate the administration, influence funding and scrutinise decisions, but it cannot simply switch off the conflict.

The military situation around Iran has not disappeared because of an election result. The Strait of Hormuz remains a critical concern, tanker traffic is still exposed to disruption, and there is no confirmed comprehensive agreement that would guarantee a return to normal shipping conditions.

In my opinion, the distinction between political expectations and actual developments is extremely important here. The market has already reacted strongly to the possibility of a different political direction, but the physical and geopolitical risks have not automatically gone away.

This does not mean that diplomacy is impossible. Quite the opposite. The election results may create additional incentives to look for a negotiated solution. But until we see concrete developments, I would be careful about treating political optimism as if it were an accomplished fact.

Fundamentals – Iran, Tanker Attacks and the USS Theodore Roosevelt

The geopolitical situation remains one of the most important variables for crude oil.

The latest developments have created a complicated environment. Following the midterm results, markets have been reassessing the possibility of a change in Washington's approach to the conflict with Iran.

But the physical situation in the region has not suddenly returned to normal.

Reuters has reported several recent vessel incidents in the Gulf, including fires involving tankers and a tugboat. These developments are a reminder that political expectations and actual shipping conditions are two very different things.

Another development worth following is the movement of the USS Theodore Roosevelt carrier strike group. The carrier departed San Diego on September 27 for an expected extended deployment to the Middle East. According to the latest USNI fleet reporting available on November 2, the strike group was still operating in the South China Sea following Exercise Keen Sword 27. So this is a deployment heading towards the Middle East, not confirmation that the carrier has already arrived there.

I consider this an important detail. The movement itself is worth monitoring, but I would not interpret it as evidence of an imminent military escalation. Military deployments can have several purposes, including deterrence and force rotation.

Nevertheless, the continued military presence in the region means that the geopolitical risk premium has not simply disappeared.

EIA Weekly Inventory Report – November 4

The latest EIA report provided another interesting piece of information.

For the week ending October 30, US commercial crude inventories decreased by approximately 865,000 barrels, bringing total stocks to 409.8 million barrels.

Other figures were also worth noting:

• Gasoline inventories decreased by approximately 222,000 barrels.

• Distillate inventories fell by approximately 3.6 million barrels.

• Refinery utilization increased to 94.5%.

• US crude oil production was estimated at approximately 14.0 million barrels per day.

The most interesting part for me is the continued decline in distillate inventories. Stocks of diesel and other distillates remain under pressure, with the latest figures indicating a particularly tight situation compared with seasonal averages.

This does not automatically mean that crude oil must rise. Inventories are only one part of the equation, and the recent price reaction has been heavily influenced by geopolitical expectations. Still, the physical market is not showing an entirely comfortable supply picture.

Source: US Energy Information Administration, Weekly Petroleum Status Report, November 4, 2026.

Market Outlook – What Am I Watching Next?

At this stage, I see two important possibilities.

The first is that today's recovery develops into a broader corrective move towards the broken channel. The Fibonacci confluence makes that area particularly interesting, and I would like to see how price behaves when it gets there.

The second possibility is that the rebound loses momentum before reaching the former channel boundary. In that case, the breakdown would remain technically dominant, and the market could return to testing the recent lows.

What I find encouraging for the bulls is not simply the fact that price bounced from the 200 SMA. It is the way it happened. After such a strong bearish move, buyers managed to regain control relatively quickly, without allowing sellers to produce another meaningful downward impulse.

I also think we should be careful not to confuse a change in political expectations with a change in the actual supply situation. The election results may have changed the market's perception of future geopolitical risk, but they have not yet resolved the underlying problems.

For now, I remain cautiously bullish on a potential recovery, but I want to see the former channel boundary tested before drawing stronger conclusions. A successful reclaim would change the technical picture considerably. A rejection would tell us that the market still needs more time to repair the damage.

Sometimes the most interesting information is not where the market turns, but how it behaves after the turn. Today's price action has certainly given us something to think about.