Stay in short positions. Last night, the WTI Crude inched up USD1.22 to USD65.95. Presently, we do not see a firm continuation of the momentum in the appearance of 5 Jun’s “Bullish Harami” candlestick pattern. This implies that the bulls are still unable to take the control of market sentiment from the bears. We also highlight that the commodity continues to trade below the 50-day SMA line, which points towards a bearish outlook. Moreover, market sentiment is currently on the negative side, given that the 14-day RSI indicator is situating below the 50-pt neutral level at 41.65 pts. All this bearish indicators support our downside view.

In the absence of a strong upside bias, we believe that the downside movement is still in play. Thus, it is best that traders maintain short positions with a stop-loss pegged above the USD69.56 threshold. This is in order to minimise the trading risk. Recall that our short recommendation was made on 28 May, following a firm breach below the USD69.56 mark.

The immediate support stays at USD64.24, or the high of 27 Feb’s “Bearish Engulfing” pattern. This is followed by the USD61.81 support mark, located at the low of 6 Apr 2018. Conversely, we set the immediate resistance at USD66.66, which was the high of 25 Jan’s high. If this level is taken out, our next resistance is pegged at the USD69.56 mark, ie the high of 17 Apr.

Source: RHB Securities Research - 8 Jun 2018