Commodities

Technical Analysis – WTI futures remain above 50.0% Fibo; MACD signals negative divergence

Posted on July 2, 2019 at 8:37 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures are on course to jump above the 20-simple moving average (SMA) after they found crucial support at the 50.0% Fibonacci retracement level of the downleg from 66.60 to 50.60 near 58.58 over the last sessions.

Having a look at the technical indicators, the MACD oscillator is creating a bearish divergence as it is slipping at the same time that prices are moving higher in the 4-hour chart, suggesting a possible negative correction soon. However, the RSI indicator is pointing upwards marginally above the 50 threshold.

The next resistance is being provided by the five-week high of 60.27 and the 61.8% Fibonacci of 60.47. If prices rise higher again, the 60.75 barrier, taken from the low on May 13 could come in focus.

In case of a downward attempt, oil prices would likely meet support at the 50.0% Fibo (58.58) again, easing upside pressure. A break below this strong hurdle could open the door for a retest of the 57.70 obstacle and the Ichimoku cloud, signaling the start for a potential neutral phase in the very short-term.

Summarizing, WTI crude oil futures have been in a bullish mode over the last three weeks, following the rebound on the 50.60 support barrier. A bearish correction is possible if there is a drop below the 50.0% Fibo, while a climb above the 61.8% Fibo would endorse the bullish picture.

commodities WTI crude

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.