Commodities

Technical Analysis – WTI oil futures flirt with supportive line; look oversold

Posted on January 14, 2020 at 10:42 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures recorded a significant downfall over the past six days after they found strong resistance at the eight-month high of 65.60 last week. Currently, the price is flirting with the ascending trend line around the 57.70 support level, supposing a possible rebound on it or a breakdown.

The negative slope in the RSI, which falls comfortably below its 50 neutral mark, and the downfall of the MACD near its zero line, they are painting a bearish picture for the short-term trading. However, with the stochastic searching for a pullback in the oversold area, it is reasonable to believe that the sell-off may appear short-lived.

The 57.70 number is the nearest support that could reject any attempt lower. If not and the price extends negative momentum, the 61.8% Fibonacci retracement level from 51.00 to 65.60 of 56.56 in the Ichimoku cloud could take over ahead of the 55.00 region

On the flip side, an upside reversal above the 50.0% Fibo of 58.29 could bring the 20-day simple moving average (SMA) of 59.30 back into view. Should it fail to hold, the 38.2% Fibo of 57.97 and the 40-day SMA, currently at 60.80 would be the next targets. A steeper bullish movement could also reach the 23.6% Fibo of 62.14.

In brief, WTI crude oil futures are facing downside pressure near the medium-term diagonal line, with sellers waiting for a decisive close below it to restore optimism over a down-trending market.

commodities 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.