Commodities

Technical Analysis – WTI futures’ advance capped by 50-MA; bearish bias intact

Posted on November 3, 2020 at 9:31 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures’ progress off the formed five-month low of 33.63, pared losses of the recent two-week decline from the 41.87 peak as it stretched back to the 50-period simple moving average (SMA) today. The Ichimoku lines’ slower downwards pace reflects waning negative price action, while the falling 50- and 100-period simple moving averages (SMAs) divulge further backing of a deteriorating outcome.

The short-term oscillators reflect mixed signals in directional momentum. The MACD is increasing above its red trigger line towards the zero mark, while the RSI is improving from its neutral threshold. However, the stochastic %K line has dipped under its %D line in overbought territory, reflecting some weakness in the positive drive.

If sellers resurface, initial support may occur from the 37.31 barrier ahead of the 36.58 obstacle. Downside moves may then receive some interference from the blue Kijun-sen line at 36.19 before meeting the 35.85 boundary, where the red Tenkan-sen line currently stands. Should steeper declines develop, the price may revisit the 33.63 trough, while further loss of ground may resume the bearish picture aiming for the 32.36 low from May 29.

To the upside, immediate resistance may commence from the 37.74 high and the adjacent overpowering 50-period SMA at 37.88. If the 50-period SMA fails to suppress the climb, the price may face the 38.27 border and the Ichimoku cloud. Rising further may then push the price towards the 100- and 200-period SMAs, currently at 39.26 and 39.59 respectively, before encountering the neighbouring 39.81 peak.

In brief, the pullback in oil has returned the commodity to a somewhat neutral phase above previous troughs. Nonetheless, the picture retains its bearish tone below the SMAs and the 39.81 level.

oil

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