Best to stay in short positions. Last night, the WTI Crude registered a USD0.02 increase to USD68.08, and left a “Doji” candlestick pattern. This implies that the session was an indecisive one. Presently, there is no change to our bearish view, as we do not see any strong upside development occurring yet. From our technical perspective, market sentiment is still weak, and the correction is likely to extend further. Note that the commodity is also trading below the 50-day SMA line, which points towards a weak outlook. We also highlight that the 14-day RSI indicator has yet to hit the 30-pt oversold level at 42.30 pts, suggesting that there is more room for further downside development. All these negative indicators enhance our downside view.

The current technical landscape shows that the correction is still in play. As such, it is best that traders maintain short positions with a new stop-loss set above the USD72.83 threshold. This is in order to minimise the upside risk. Recall that our short recommendation was made on 12 Jul, after the commodity’s price dropped firmly below the USD72.83 mark.

Our immediate support is maintained at USD67.16, obtained from the high of 14 Jun. If this level is taken out, the following support is found at USD63.59, derived from 18 Jun’s low. Conversely, we set the immediate resistance at USD69.56, which was the high of 17 Apr. The next resistance is pegged at the USD72.83 threshold, or the high of 22 May.

Source: RHB Securities Research - 18 Jul 2018