Maintain short positions, as the bears are coming back to test the 200-day SMA line. The WTI Crude failed to sustain its earlier session’s positive tone. It closed USD0.62 lower at USD61.04 after tagging a low and high of USD60.64 and USD63.33. Broadly, we are still seeing signs that the commodity is still in the process of developing a multi-week correction phase. This phase is to correct its prior upward move, which took place between the low of 24 Dec 2018’s USD42.36 and 23 Apr’s USD66.60. This implies the downside risk remains high, with the probability of said SMA line being broken getting higher. We keep our negative trading bias.

On expectations that the WTI Crude’s correction leg still has legs to go further, we stick with our recommendation that traders stay in short positions. These were initiated at USD61.81, or the closing level of 2 May. For riskmanagement purposes, a stop-loss can be placed above the USD66.60 level.

Immediate support is set at USD58.17, or the low of 25 Mar and slightly below the 200-day SMA line. This is followed by the USD54.52 level, which was the low of 8 Mar. Meanwhile, the immediate resistance is set at USD66.60, or the high of 23 Apr. This is followed by USD70, a round figure.

Source: RHB Securities Research - 14 May 2019