Maintain short positions. The WTI formed a black candle in the latest trading session, which at the closing firmly breached the 50-day SMA line. This indicates that the bears were in the control. Intraday, the commodity generally trended lower throughout the session, from a high of USD70.03 to a low of USD68.47, before ending at USD68.65, with a decline of USD1.10. The weak session is an extension from the breakdown of the uptrend line, as drawn in the chart. The daily RSI reading of 37.67 is suggesting that the retracement so far has not reached the oversold level yet. Hence, we are keeping our negative trading bias.

As the negative bias continues to play out without signs of reversing, we continue to recommend that traders keep to short positions. We initiated short positions at USD70.97, which was the closing level of 11 Oct. For risk management purposes, a stop-loss can now be placed at the breakeven level.

Immediate support is maintained at USD66.86, which was the low of 7 Sep. This is followed by USD64.43, the low of 16 Aug. Conversely, the immediate resistance is now at USD75.27, ie the high of 3 Jul. This is followed by USD76.90, or the high of 3 Oct.

Source: RHB Securities Research - 19 Oct 2018