Commodities

Technical Analysis – WTI futures recede below 200-MA, denied passage over 43.69

Posted on September 10, 2020 at 8:35 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures have found some footing on the 100-day simple moving average (SMA) of 37.03, residing at the Ichimoku cloud’s lower band, following ineffective efforts to overrun the vital resistance border of 43.69. The flat Ichimoku lines and the converging SMAs appear to signal oxygen-deprived directional drive, which could nudge the price sideways.

That said, the short-term oscillators also display conflicting signals in momentum. The MACD is extending a negative move below its red trigger line and the zero mark, while the RSI tries to maintain its return above the 30 level. Furthermore, the stochastic oscillator has turned bullish, promoting further advances. Nevertheless, the pullback is a significant development as the last time the MACD and the RSI moved into negative territory was back in early May.

Should the recent pullback below the 200-day SMA persist, immediate support may arise from the reinforced 100-day SMA – coupled with the lower boundary of the cloud – ahead of the adjacent 36.12 fresh low. Moving beneath this, the neighbouring 34.48 key barrier from June 12 may impede the price from challenging the support section of 31.13 to 30.71, relating to the troughs at the end of May.

If buying interest intensifies, early constraints may arise from the 38.74 obstacle ahead of the Ichimoku lines at 39.95 and the merged 50- and 200-day SMAs, at the cloud’s ceiling of 41.14. In the event buyers manage to clearly violate the toughened 43.69 hurdle, the price may rally towards the 48.80 – 49.29 resistance trench, before targeting the 51.00 handle.

Summarizing, despite the recent pullback, oil’s short-term picture reserves its positive demeanour while above the 100-day SMA and the 34.48 trough.

oil

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.