Commodities

Technical Analysis – WTI crude oil futures hover above 7-month low; bearish outlook in place

Posted on November 6, 2018 at 10:25 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures sank to a new seven-month low of 62.51 on Monday, recording the sixth consecutive bearish day. Prices remain below the simple moving averages (SMAs) in the 4-hour chart and are hovering slightly above the aforementioned low.

Having a look at the technical indicators, the blue %K line of the stochastic oscillator is turning up, ready to create a bullish crossover with the red %D line. Moreover, the MACD oscillator stands above the trigger line in negative territory. These are signaling a potential change of momentum to the upside in the short-term and the very short-term.

Should the price manage to strengthen its negative bias and post a significant leg below the seven-month low, the next support could come around 61.77, taken from the low on April 6. A break below this area would shift the bias to a more negative one and open the way towards the 60.15 barrier.

On the flipside, if prices rebound from the recent low, they could touch the 20-SMA near 63.44 at the time of writing, before heading towards the 64.10 resistance level. Further improvement could drive oil prices until 65.40, given that the 40-SMA at65.00 is broken first. A penetration of this hurdle could send the price even higher until the 23.6% Fibonacci retracement level of the downleg from 76.90 to 62.50, around 65.90, breaking the short-term descending trend line to the upside.

To summarize, WTI crude shifted the bullish outlook to negative, especially after the slip below the 64.00 psychological level. In the short-term, the price has been mostly declining since October 3.

commodities WTI crude

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.