Maintain long positions. The WTI Crude was trading in a sideways range between USD52.91 and USD53.94, before closing USD0.56 higher at USD53.69. Observing the black gold’s price actions over the recent two weeks, we are seeing signs that it is developing a consolidation phase below the immediate resistance of USD54.55 and around the 50-day SMA line. We see this as a healthy development to correct its prior strong price rally – this implies the overall upward price trajectory that started from the low of USD42.36 on 24 Dec 2018 is still firmly in place. Hence, we keep to our positive trading tone.

As the price actions continue to suggest a relatively narrow consolidation is developing – instead of a sharp retracement – we continue to recommend traders keep to long positions. These were initiated at USD49.78, or the closing level of 8 Jan. For risk-management purposes, a stop-loss can be placed at the breakeven level.

Towards the downside, immediate support is set at USD50.38, which was the low of 14 Jan. Breaking this may see the market test USD42.36, or the low of 24 Dec 2018. Meanwhile, the immediate resistance is set at USD54.55, ie the high of 4 Dec 2018. This is followed by USD57.96, which was the high of 16 Nov 2018.

Source: RHB Securities Research - 28 Jan 2019