It is best to stay in short positions, given that the correction is still in play. Last night, the WTI Crude ended at USD68.87, posting a USD0.15 gain. As a result, a white candle was formed, after the commodity oscillated between a low of USD68.34 and high of USD68.97. However, this increase does not negate our downside view, given that no strong upside development was sighted yet. We believe that the bearish bias in the “Bearish Engulfing” candlestick pattern on 11 Jul is still exerting itself. At this juncture, chances are high that the correction could still extend once the breather above USD64.22 ends.

In the absence of any strong upside development, this implies the sellers are still in dominance of market sentiment. As such, it is best that traders maintain short positions. In order to minimise the trading risk, we advise setting a stop-loss above the USD71.10 mark. This is in line with our initial short recommendation below the USD72.83 threshold on 12 Jul.

We set the immediate support at USD67.03, obtained from the low of 17 Jul. This is followed by the next support at the USD64.22 mark, located at the low of 5 Jun’s “Bullish Harami” pattern. Conversely, the immediate resistance is pegged at USD71.10, which was the high of 20 Jul. The next resistance is maintained at the USD75.27 threshold, or the high of 3 Jul.

Source: RHB Securities Research - 28 Aug 2018