Commodities

Technical Analysis – WTI futures muted; weak directional momentum persists

Posted on October 22, 2020 at 7:40 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures are presently confronting the Ichimoku cloud after having dipped slightly below the flat red Tenkan-sen line, as well as the 50- and 100-day simple moving averages (SMAs). The bullish overlaps of the 200-day SMA are still intact although the averages have adopted a more horizontal demeanour, as have the Ichimoku lines, all further backing the ranging market.

The short-term oscillators reflect a rather frozen state in the commodity. The MACD and the RSI indicate evaporated directional momentum as they are fixed around their neutral marks. That said, the RSI still holds above the supportive line, keeping hopes for advances alive, while the stochastic oscillator maintains a negative bearing, promoting further losses.

In a negative scenario, limitations may commence immediately from the cloud’s lower band coupled with the static blue Kijun-sen line at 39.38 ahead of the tough 200-day SMA at 38.10. Penetrating under the longer-term average, the vital support band of 36.12 – 36.62 may attempt to keep negative pressures at bay. Should it fail to do so, the 34.48 trough beneath may delay steeper declines from challenging the area of lows of 30.71 – 31.13.

If buying interest intensifies, heavy resistance from the converged averages (red Tenkan-sen line, 100- and 50-day SMAs) around 40.55 and the adjacent high of 41.87 may limit the commodity’s efforts to advance. Another step up may encounter the durable resistance of 43.69 from March 2, which has capped further appreciation in oil for some time now. Successfully triumphing above this sturdy border, the price may then shoot up, targeting the resistance zone of 48.80 – 49.29.

Summarizing, oil retains a neutral bias in the short-to-medium term timeframe. A break below 36.12 may snowball negative moves in the commodity, while a break above 43.69 could significantly boost them.

oil

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