Commodities

Technical Analysis – WTI builds confidence above Ichimoku cloud

Posted on June 4, 2020 at 8:38 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures pierced above the 100-day simple moving average (SMA) located at the 36.10 level, that being the 50.0% Fibonacci retracement of the down leg from 65.61 to 6.62. The commodity’s correction from the 6.62 bottom has breached the Ichimoku cloud and looks to be preparing to accelerate above a critical limiting region. Additionally, the rising Ichimoku lines and the turn up in the 50-day SMA may further assist this short-term view.

The short-term oscillators presently seem to maintain a positive tone, despite exhibiting the slight weakness in price. The MACD, deep in the positive zone is holding above its red signal line, while the RSI marginally retreats from the 70 border. Moreover, the composed stochastic lines have yet to cement a bearish mode, despite the negative overlap between them.

If buyers manage to restore a positive bearing, initial resistance could develop through the gap on the way towards the resistance region from the 61.8% Fibo of 43.10 to the 43.69 inside swing low. If this border fails to halt the ascent, the long-term timeframe would embrace a neutral mode, with the price challenging the 200-day SMA at 46.44. Should more gains evolve, the pair may see the 48.80 peak ahead of the 76.4% Fibo of 51.67.

Otherwise, if sellers steer under the 50.0% Fibo of 36.10, support could commence from the 34.78 mark – where the red Tenkan-sen lies – ahead of the cloud’s upper surface. Moving under the 30.71 trough, the 27.94 barrier may come under focus before the 50-day SMA and the 24.38 low attempt to apply the brakes on the decline.

In brief, the very short-term picture is bullish above 30.71 and a shift above 48.80 could see a neutral bias reappear in the medium term. Yet, a close below 20.52 would spark fears of the down trend.

oil

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