Commodities

Technical Analysis – WTI futures struggle after conquering 200-day SMA

Posted on August 27, 2020 at 9:00 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures are striving to overcome a critical resistance at 43.69, after having nudged over the 200-day simple moving average (SMA). Positive momentum has been gradually shrinking for approximately two-months, mirrored in the flattening out of the Ichimoku lines. Yet, the price continues to steadily crawl higher, maintaining a positive tone above the SMAs and the Ichimoku cloud.

The short-term oscillators further reflect the anaemic positive momentum. The MACD, slightly in the positive region, continues to drag below its red trigger line, while the RSI remains stalled in the bullish section. That said, the stochastic %K line has penetrated above the 80 level, endorsing improvements in the commodity.

To the upside, immediate obstructing resistance may come from the 43.69 inside swing low from March 2. Overrunning this, the commodity may accelerate towards the 48.80 to 49.29 resistance band. If this border fails to terminate the climb, sustained buying interest may test the 51.00 handle ahead of the 54.62 peak, reached on February 20.

Otherwise, initial congested support may arise from the nearby 200- and 50-day SMAs at 42.05 and 41.33 respectively. Dipping under this zone, where the Ichimoku lines also reside, the cloud’s upper surface and the 38.74 low may test the unfolding move. Should steeper declines ignore the 37.07 barrier, the price may challenge the 100-day SMA at 35.17 and the trough of 34.48 slightly beneath.

In brief, the short-term timeframe preserves a positive tone above the SMAs and the 38.74 low. Moreover, positive sentiment could be reinforced with the approaching bullish crossover of the 200-day SMA.

oil

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.