Commodities

Technical Analysis – WTI futures advance above SMAs with weak momentum

Posted on May 14, 2020 at 6:42 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures are trading around the vicinity of 26.71, following the bounce off the multi-year low of 6.62 and the 10.00 handle. The price failed on a second attempt to breach this level, but it remains above the 20- and 40-day simple moving averages (SMAs).

Looking at the short-term oscillators, the MACD and the RSI promote slight improvements around their neutral marks, despite diminished directional momentum. The stochastic oscillator is also turning slightly higher, while the 20- and 40-day SMAs maintain a neutral-to-bullish tone.

Should buyers drive above the 26.71 resistance, they could encounter an initial strengthened barrier from the 38.2% Fibonacci retracement level of the down leg from 65.61 to 6.62 at 29.00 inside the Ichimoku cloud. A step above may meet the 33.20 level and the 50.0% Fibonacci of 36.06. Overcoming these borders, the price may shoot for the 100-day SMA currently at 39.76.

Otherwise, if sellers take control, initial support could come from the 40-day SMA at 22.80 ahead of the 20-day SMA, which overlaps with the 23.6% Fibonacci at 20.56. Diving further, immediate limitations may arise from the 10.00 psychological mark, taken from the latest lows. If the bears persist, the attention could then move towards the 6.62 trough.

All in all, the very short-term timeframe sustains a neutral-to-bullish mode for now. However, a break above the 100-day SMA could open the door for more bullish actions.

WTI crude

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