Commodities

Technical Analysis – WTI futures fail to conquer neckline of looming double bottom

Posted on February 18, 2020 at 8:57 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures yesterday – as positive momentum evaporated – were unable to decisively overrun the neckline and complete a possible double bottom pattern. The commodity today has declined to the nearby Ichimoku cloud’s upper band around 51.30, with backing from the technical indicators and the easing in the red Tenkan-sen line.

The short-term oscillators suggest an increase in negative momentum for now. The MACD, in the positive region, has slipped below its red trigger line, while the falling RSI has just moved underneath its neutral mark. That said, the intact bullish crossover between the Ichimoku lines and the recent bullish crossover of the 100-period simple moving average (SMA) by the 20-period one, suggest a retest of the neckline could still play out.

To the downside, immediate support could come from the cloud and the 50-period SMA (joined by the Kijun-sen line) around 50.98. Moving lower, the troughs of February 4 and 10 respectively – forming the multi-month low and the pattern – at 49.29 could be revisited. The next hurdles could come at 48.29, from 8 January 2019 and the 47.74 inside swing high from January 2019, before the 45.35 low.

Otherwise, if buyers push above the moving averages, initial resistance could come from the neckline at 52.16 ahead of 53.15, which is the 23.6% Fibonacci retracement of the down leg from 65.61 to 49.29. Climbing higher, 54.75 could interrupt the test of a key region from the 38.2% Fibo of 55.55 to the 56.00 peak, which also encompasses the 200-period SMA.

Summarizing, the very short-term bias has turned neutral but if the price shifts above the 52.16 neckline, the picture could turn positive.

commodities oil WTI

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