Keep in short positions as the current bearish bias remains intact. Last Friday was a bullish session for the WTI Crude, as it posted a USD0.83 gain to close at USD67.63. As a result, a white candle that breached above the previous USD67.03 resistance was formed. Nevertheless, until we see a strong upside development, the bears are still in control of market sentiment. At this level, the bulls are still unable to wrest control below USD71.10. The fact that the commodity is trading below the 50-day SMA line also points towards a weak outlook, thereby enhancing our downside view.

Based on the current technical landscape, we believe it is best that traders maintain short positions. In order to minimise the upside risk, we advise setting a stop-loss above the USD71.10 threshold. Our short call was initially triggered on 12 Jul, after the strong downside development pressed the WTI Crude’s price below the USD72.83 mark.

We set the immediate support at the USD67.03 mark, ie 17 Jul’s low. If this level is taken out, the following support is found at USD64.22, obtained from the low of 5 Jun’s “Bullish Harami” pattern. On the flip side, our immediate resistance is pegged at USD71.10, ie 20 Jul’s high. The following resistance is pegged at the USD72.83 threshold, or 22 May’s high.

Source: RHB Securities Research - 13 Aug 2018