Commodities

Technical Analysis – WTI futures’ progress above key resistance hits a snag

Posted on November 26, 2020 at 9:30 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures’ thrust over the governing 43.76 mark seems to be fading from its recently logged eight-and-a-half-month high of 46.22. Although positive signals remain present, the bullish sentiment looks to be stumbling before reaching the 46.80 resistance level. The currently paused Ichimoku lines are still conveying a positive tone, while the 50- and 100-day simple moving averages (SMAs) are communicating a neutral-to-bullish outcome.

The short-term oscillators reflect deteriorating positive drive and suggest a retracement may unfold. That said, the MACD is north of the zero level and remains above its red trigger line, while the RSI is falling after ricocheting off the 70 barrier. Furthermore, located in overbought territory, the stochastic %K line seems to be dipping underneath its %D line, suggesting a pullback in price, though this negative backing is yet to be fully confirmed.

If selling interest grows, initial tough support may develop from the key limiting section of 42.65-43.76, which also contains the red Tenkan-sen line. Successfully returning beneath this, the retracement may encounter a reinforced support zone from the 100-day SMA at 40.83 until the 39.66 inside swing high. Tumbling past this congested region, which includes the 50-day SMA, the blue Kijun-sen line and the Ichimoku cloud, the black gold may test the 37.39 trough and the adjacent 200-day SMA at 36.49.

Steering above the previous candles’ high of 46.22, the commodity may receive early resistance from the 46.80 barrier. Overrunning this mark, buyers may aim to challenge the critical resistance band of 48.80-49.29. Succeeding, their focus may then turn towards the 51.00 handle.

Summarizing, oil is retaining its short-term neutral-to-bullish demeanour above the SMAs and 42.65-43.76 zone.

oil

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