Commodities

Technical Analysis – WTI futures consolidate but continue to favour upside

Posted on January 19, 2021 at 9:10 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures appear to be finding a foothold on the 50-period simple moving average (SMA) and the cloud’s upper surface, after the pullback from the 11-month high region of 53.91. The Ichimoku lines are reflecting the sideways edging in the price, while the climbing SMAs are promoting additional advances.

Looking at the short-term oscillators, we can see a slight pickup in positive momentum. The MACD is holding marginally below its red trigger line and the zero mark, while the rising RSI is pushing above its neutral threshold. Furthermore, the positive tone in the stochastic oscillator is strengthening, endorsing bullish price action.

If strong traction off the cloud’s upper band materialises and pushes the price over the blue Kijun-sen line at 52.90, next upside constrictions could be seen around the multi-month top of 53.91. Overrunning this, buyers may face a critical resistance section of 54.34-54.75, which contains the 54.62 peak from February 20, where the market collapsed. Conquering this border too could propel the price towards the 56.00 hurdle before traders’ attention turns to the 57.40 barrier.

If sellers retake control and steer below the 50-period SMA at 52.35 and into the cloud, early support may develop from the region of 51.49-51.75. Plunging deeper, the floor of the cloud at 50.45 could test the decline. However, should the 100-period SMA give way, the price of the commodity could target the 49.46 trough before challenging the 200-period SMA at 48.54.

Summarizing, in the short-term timeframe, oil continues to remain positively skewed as long as it holds above the Ichimoku cloud, SMAs and the nearby 51.49 low.

oil

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