WTI: Crude oil may have resume bearish trend
Fawad Razaqzada July 31, 2018 12:54 PM
Despite last week’s bullish close, WTI is set to end lower on the month. And with prices already turning lower on the week, we are not convinced that oil has bottomed out yet.
On Monday, both oil contracts started the new week how they ended the last one: higher. But the bullish momentum appears to have faded today, boosting the prospects of a possible resumption of the downward trend for oil prices.
Despite last week’s bullish close, WTI is set to end lower on the month. And with prices already turning lower on the week, we are not convinced that oil has bottomed out yet. Indeed, both oil contracts remain (comfortably) below their respective key pivotal levels: Brent holding below $75.90 and WTI below $71.60 prior swing points.
Thus, last week’s bounce may well have been a counter move against what could be a stronger downward trend.
If the above statement is indeed the case and the fact we have seen signs of bulls getting trapped above last week’s ranges today then this could be an indication that prices will now go on to drop towards the next big pool of liquidity which would be below last week’s low. However, if prices recover and go back above last week’s highs then one has to seriously consider the bullish scenario.
Taking a closer look at the daily chart of WTI we can see that the re-test of the broken bullish trend has offered strong resistance around the $70 handle today. The selling pressure has abated for the time being around short-term support at $68.30. But if this level gives way later on today or tomorrow then we could see the selling force gather momentum, potentially pushing WTI towards the next levels of support at $67.00 or $66.20. An even stronger support level is further lower at around $63.80, where the previous swing low meets the 200-day moving average. But it remains to be seen whether oil prices will drop that far.
From a bullish point of view, meanwhile, any move back above today’s high and resistance in the $70.00-$70.20 area would be a positive outcome in the short-term outlook. If this were to happen then WTI may go on to probe liquidity above the most recent high at $71.60 before deciding on its next directional move.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.