Commodities

Technical Analysis – WTI oil futures hover above SMAs in positive outlook

Posted on January 7, 2020 at 11:13 am GMT

Melina Deltas, XM Investment Research Desk

WTI crude oil futures have been making higher highs and higher lows since October 2019 and yesterday the price touched a fresh eight-month high of 64.72, although it ended the day in the red. Today, the oil price is trying to recover some of the losses, remaining above the short-term simple moving averages (SMAs).

The momentum indicators in the 4-hour chart are currently supporting that positive momentum is likely to strengthen in the short-term. Specifically, the stochastic oscillator is picking up speed above the 20 level, following the bullish cross within the %K and %D lines, while the RSI, although somewhat flat, is still standing above its 50 neutral mark.

An extension to the upside could initially move the price until the 64.72 resistance level before and then towards the 66.57 mark, identified by the peak on April 2019.

On the flipside, if the price weakens, it may find strong obstacle at the 40-SMA currently at 62.73 and the 23.6% Fibonacci retracement level of the upleg from 55.00 to 64.72 near 62.40. More declines could next send the commodity towards the uptrend line near 61.50, while slightly lower the 38.2% Fibo of 61.00, which is near the 100-SMA could next act as support.

To sum up, WTI futures look positive in the short- and medium-terms.

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.