Technical Analysis – WTI futures hold above SMAs and Ichimoku cloud

Melina Deltas, XM Investment Research Desk

WTI crude oil futures continue to rise above the Ichimoku cloud and the 20- and 40-period simple moving averages (SMAs) in the 4-hour chart, stretching its upward trajectory near the five-month peak of 43.77.

According to the RSI, the commodity could push for further gains in the short-term as the indicator picks up steam near its neutral threshold of 50. The stochastic is also advancing, completing a bullish crossover within its %K and %D lines.

In the positive scenario, where the price continues to expand, the next stop could occur around the 43.57 resistance. If the market manages to overcome that area, traders could look for resistance at the five-month peak of 43.77, a break of which could trigger steeper bullish actions towards the 48.80 barrier, taken from March 3.

A reversal to the downside could stall somewhere between the bottom of the Ichimoku cloud at 42.50 and the 42.36 support level. Lower, the 200-period SMA currently at 42.00 will be closely watched as any violation at this point could potentially trigger additional declines in the market, probably leading the price down to 41.45.

Regarding the medium-term picture, the bullish outlook remains in place as oil continues to trade near the five-month peak. A dive below 200-period SMA could shift the sentiment to neutral.

To sum up, the short-term bias is bullish, though the market could experience some weakness as it could be close to overbought levels. The medium-term outlook also holds positive.