Commodities

Technical Analysis – WTI futures take a breather; upside risks remain solid

Posted on December 15, 2020 at 2:53 pm GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures improved mildly off the Ichimoku lines but are struggling to restart the upwards trajectory with a breakout of the small sideways move. The fairly horizontal Ichimoku lines reflect the stall in positive momentum, while the rising simple moving averages (SMAs) are suggesting steady advances in the pair.

The short-term oscillators suggest conflicting signals in directional momentum. The MACD, in the positive region, is flirting with its fairly flat red signal line, while the RSI is pointing downwards in the bullish region. Moreover, the stochastic %K line is rising above the %D line, promoting extra strength in the pair.

If buying interest intensifies, the bulls face immediate resistance from the section of 47.42-47.71, which includes the freshly formed nine-month peak. Surpassing this could see buyers target the 48.54-48.80 border, which refers to a region of multiple highs in early March of this year. Triumphing over this barrier too, may see the price then catapult towards the 50.41 high from the end of February.

Otherwise, if oil starts to retreat, early support may come from the Ichimoku lines surrounding the 46.48 low, and the 50-period SMA barely beneath at 46.22. Should sellers manage to steer the price below the 50-period SMA, the zone from the 45.70 trough until the floor of the cloud at 45.29, which contains the 100-period SMA, may attempt to dismiss further declines from being realised. However, if the price dives deeper, it may encounter another hardened support area of 44.65-44.93.

Overall, oil appears to maintain its bullish bias in the near-term picture above the SMAs and the 44.65-44.93 border.

oil

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