Commodities

Technical Analysis – WTI futures find floor at 20-day SMA; outlook bullish

Posted on December 24, 2020 at 7:50 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures stretched theirs seven-month old rally to a ten-month high of 49.39 on Friday before pulling slightly lower.

The MACD seems to be losing momentum below its trigger line, the RSI is still hovering in the positive region following the pullback from the overbought territory, while the red Tenkan-sen line is flattening above the blue Kijun-sen, all signaling a more cautious trading in the short term.

The market trend, however, is likely to hold on the upside as long as the price trades above its simple moving averages (SMAs) and the Ichimoku cloud.

The price needs to overcome the ten-month peak of 49.39 to meet a key barrier at 54.62, registered on February 16. The 65.61 resistance from January 12 could act as strong hurdle too.

Should weakness extend below the 20-day SMA, support to downside movements could be initially detected near the 40-day SMA and the 43.74 level. Clearing that zone, the decline could next stall around the 200-day SMA at 41.85 before meeting the 23.6% Fibonacci retracement level of the up leg from 6.62 to 49.39 at 39.22. Beneath those obstacles, the 33.95 line could be another another level to watch.

In the long-term picture the sentiment turned bullish after the price surpassed the 43.74 number. The positive slope in the 40-day SMA, which crossed the 200-day SMA, also increases optimism for a brighter outlook.

WTI crude

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