Commodities

Technical Analysis – WTI futures may have more weakness in store in short term

Posted on January 22, 2020 at 1:19 pm GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures with delivery in March, are declining below the three-month ascending trend line, creating a bearish-to-neutral view.

Momentum indicators are pointing to a negative bias in the short term with the RSI just below 50 and the stochastic oscillator is heading towards the bearish territory. The MACD oscillator is strengthening its downward movement below the trigger and zero line. In addition, the 40-day simple moving average (SMA) is pointing down and approaching the 20-SMA for a possible bearish cross.

Further losses should see the 61.8% Fibonacci retracement level of the upward wave from 51.00 to the eight-month high of 65.60 near 56.56 acting as a major support. A drop below this level would reinforce the bearish structure and open the way towards the next key support level of 55.00, taken from the low on the end-November 2019.

In the event of an upside reversal, the 50.0% Fibonacci retracement at 58.29 and the uptrend line could act as a barrier before being able to re-challenge the 20-day SMA at 59.50. A break above this barrier would shift the medium-term outlook to a more bullish one as it would take the pair above the 40-Day MA and the 38.2% Fibo of 57.97. Further gains would lead the way towards the 23.6% Fibonacci of 62.14.

Summarizing, WTI crude oil futures are facing downside pressure below the medium-term diagonal line.

commodities crude oil

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