Maintain long positions as bulls are coming back. The WTI Crude ended yesterday’s trading on a negative note. For the intraday, the commodity reached a low and high of USD52.16 and USD54.44, before closing at USD52.89, indicating a decline of USD0.36. The weak session can be seen as a possible sign that the commodity is taking a breather after the prior sessions’ strong performance. Broadly, we believe the commodity is still in the early stage of developing a deeper rebound. This rebound was triggered after the commodity experienced steep retracement between early October and end-November – which saw its daily RSI reaching an oversold threshold and at the same time flashing out positive divergence. On these technicalities, we keep our positive trading bias.

Given the expectation that the commodity rebound is still in its infancy stage and likely to extend (as a trend), we continue to recommend traders maintain long positions. We initiated these positions at USD52.95, the closing level of 3 Dec. For risk management purposes, a stop-loss can be placed at below USD49.41.

Towards the downside, immediate support is expected at USD49.41, the low of 29 Nov. Breaking this may see the market test the USD45.58 threshold, which was the low of 31 Aug 2017. Overhead resistance is expected at the USD54.12 mark, ie the high of 23 Nov. This is followed by USD57.96, the high of 16 Nov.

Source: RHB Securities Research - 6 Dec 2018