Commodities

Technical Analysis – WTI futures bears face big challenge near 21.90; stochastic seems oversold

Posted on April 14, 2020 at 7:10 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures have been on the sidelines over the last couple of days as the 23.6% Fibonacci retracement level of the down leg from 54.70-19.25 at 27.56 seems to be a struggle for the bulls. The price could lose some more ground in the short-term, according to the RSI, as it is changing direction to the downside. However, the stochastics are warning over an oversold market, forming a bullish crossover within the %K and %D lines.

A rebound on the 21.90 support could keep the commodity on the sideways movement started on April 2. Should the price overcome the 20- and 40-period simple moving averages (SMAs), resistance could run up to the 23.6% Fibo of 27.56 and the 29.00 handle. Higher, the 30.80 barrier and the 38.2% Fibonacci mark of 32.75 may also prove a challenge, switching the 4-hour chart to slightly bullish.

Alternatively, a decline under 21.90, could meet a strong barrier at the multi-year trough of 19.25. Dropping below this line, the 19.00, 18.00 and 17.00 round numbers could take control. Moreover, the 161.8% Fibonacci mark of 13.20 is coming lower, taken from the up leg from 19.25 to 29.00.

In the medium-term picture, oil prices are still in a strong negative profile over the past three-and-a-half months.

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.