Bearish view remains in play, maintain short positions. The WTI Crude posted a USD0.79 loss to USD64.73 last night. Presently, we believe that the current correction is still in play. Although a reversal “Bullish Harami” candlestick pattern appeared on 5 Jun, there was no positive follow-through occurs. At this juncture, we view that the commodity is merely taking a breather above the USD64.24, after dropping to a 7-week low on 5 May. Overall, market sentiment is still weak. We also highlight that the 14-day RSI indicator is situating below the 50-pt neutral level at 35.59 pts. This implies a negative outlook, thereby enhancing our bearish view.

As we do not see strong bullish development yet, this indicates that the bears are still in control. As such, traders are advised to maintain short positions. In order to minimise the upside risk, we advise setting a stop-loss above the USD69.56 threshold. Our short call was initially triggered on 28 May, after a strong downside movement below the USD69.56 level.

We set the immediate support at USD64.24, which was the high of 27 Feb’s “Bearish Engulfing” pattern. For the next support, look to USD61.81, ie 6 Apr 2018’s low. Towards the upside, our immediate resistance is maintained at USD66.66, located at the high of 25 Jan’s high. This is followed by the USD69.56 resistance threshold, obtained from the high of 17 Apr.

Source: RHB Securities Research - 7 Jun 2018