Technical Analysis – WTI futures’ compass points north; bias optimistic

Anthony Charalambous, XM Investment Research Desk

WTI oil futures maintain a bullish tone but appear to be mildly faltering just shy of a resistance belt of 58.75-59.01, after the commodity’s recent rally above the 53.92 ceiling of a consolidation phase. The bolstering Ichimoku lines are feeding the ascent, while the simple moving averages (SMAs) are defending the bullish picture.

The short-term oscillators are conveying an upside preference despite transmitting some easing in positive momentum. The MACD, way above zero, is beyond its red trigger line, while the dwindling RSI remains deep in the overbought territory. Furthermore, above the 80 mark, the stochastic %K line has dipped below its %D line but has yet to confirm any real negative tendencies. It appears that a minor retreat in the commodity could unfold but the relative picture remains positive.

If the upwards trajectory perseveres, the resistance band of 58.75-59.01 could be the first obstacle to impede additional gains in the commodity. Yet, if buyers manage to successfully push over this boundary, they may face another upside limiting section of 59.62-59.81. Should efforts to improve persist, the bulls could then hit the 60.65 border identified in January 2020.

Otherwise, withdrawing from the 12½-month top of 58.60, initial support could come from the red Tenkan-sen line at 57.80 and the blue Kijun-sen line at 56.74 ahead of the 56.39 barrier. If sellers steer the price lower, the pullback may meet the cloud’s upper surface and the 55.29 trough. However, a deeper retracement may encounter the adjacent 50-period SMA of 55.03 before targeting the support section of 53.54-53.92, which also contains the 100-period SMA.

Summarizing, oil’s upside credibility should remain intact as long as the price holds above the 55.29 trough and the SMAs, while a climb above 59.01 could boost the ascent.