Traders are advised to stay in short positions as the current correction remains intact. The WTI Crude ended last Friday’s session at USD68.69, posting a USD0.92 loss. As a result, a black candle that breached below the 50-day SMA line was formed, which implies that the session was led by the sellers. Presently, the bears continue dominating market sentiment. Although momentum was seen in the “Bullish Engulfing” candlestick pattern on 24 Jul, there was no strong upside follow-through sighted. Technically speaking, the bulls are still unable to wrest control over the bears.

In the absence of a strong upside development, we believe that the current correction remains in play. Hence, traders are advised to stay in short positions with a stop-loss pegged above the USD71.10 threshold. This is so that the upside risk is minimised. Recall that we made the short recommendation on 12 Jul, following a firm breach below USD72.83.

Towards the downside, our immediate support stays at USD67.03, located at the low of 17 Jul. The next support is set at USD64.22, which was the low of 5 Jun’s “Bullish Harami” pattern. Conversely, the immediate resistance is pegged at USD71.10, obtained from the high of 20 Jul. If this level is taken out, the following resistance is set at USD72.83, or the high of 22 May.

Source: RHB Securities Research - 30 Jul 2018