Commodities

Technical Analysis – WTI futures remains bearish despite recent pullback

Posted on January 28, 2020 at 9:21 am GMT

Anthony Charalambous, XM Investment Research Desk

WTI oil futures appears to be sustaining its very short-term bearish picture despite the oscillators currently reflecting an improvement in positive momentum. Further aiding the move south are the downward sloping 20-, 50- and 100-period simple moving averages (SMAs) and their bearish crossovers of the 200-period SMA.

The MACD has climbed above its red trigger line deep in the negative zone, while the RSI, currently in the oversold territory, is flirting with the 30 level. Noteworthy though, is the restrictive trendline and the location of the RSI and the MACD, which signal that a revival of the decline could unfold if seller’s pickup.

In case of more losses, the 52.44 support and the fresh three-and-a-half month low of 52.12 could challenge the bears. Steering underneath the low, the more important region of 50.98 (from 3 October 2019) to 50.51 (from 7 August 2019) – which also encapsulating the June 2019 troughs – could halt a further sell-off towards the 49.39 barrier.

Alternatively, if buyers push higher, first resistance would come at the 53.68 level ahead of the 20-period SMA at 54.12. Next, the down sloping trendline around the inside swing low of 54.75 could interrupt the test of the 55.32 resistance, which is the 23.6% Fibonacci retracement of the down leg from 65.61 to 52.12. Overcoming this, the 50-period SMA at 56.54 could deter the price testing the 38.2% Fibo of 57.29.

Overall, the very short-term bias is bearish and a dive below the 50.51 low could see a sell-off unfold in oil futures.

commodities oil WTI

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.