Initiate short positions as the YTD low has been broken. The WTI Crude formed a black candle in the latest trading session, which at the closing pierced through the previous immediate support of USD49.41. The intraday tone was negative as the commodity generally slid lower for the entire session – the high and low were registered at USD49.59 and USD45.79, before closing at USD46.24, a decline of USD3.64. The giveaway of the said previous immediate support indicates the commodity’s steep retracement since the high of USD76.90 on 3 Oct is still extending. This is despite the daily RSI flashing out an oversold reading. However, as price actions continue to point towards downside development, we switch our trading bias to negative.

Our previous long positions that we initiated at USD52.95, or the closing level of 3 Dec, were closed out at USD49.41 in the latest session. As the negative trend is now extending, we initiate short positions at the latest closing. A stop-loss can be placed at above USD49.41.

Immediate support is now eyed at the USD45.58 threshold, which was the low of 31 Aug 2017. This is followed by USD43.65, the low of 10 Jul. Moving up, immediate resistance is expected at USD49.41, ie the low of 29 Nov. This is followed by USD54.55, the high of 4 Dec.

Source: RHB Securities Research - 19 Dec 2018