Maintain short positions pending completion of the correction phase. The WTI Crude’s long-term upward move started from the low of USD26.05 on 12 Feb 2016 and reached an interim top of USD76.90 on 5 Oct 2018. From that point, the commodity retraced sharply to a low of USD42.36 on 24 Dec 2018. This retracement can be seen as the beginning of a multi-month consolidation phase for the black gold – which we think is still incomplete. In the short term, the commodity is seen as in the process of retracing to correct its prior upward move that took place between the low of USD42.36 on 24 Dec 2018 and the high of USD66.60 on 23 Apr. Until signs of this correction reaching an end emerge, we are keeping our negative trading bias.

As the commodity is still showing signs of extending its correction phase, we retain our recommendation for traders to stay in short positions. These were initiated at USD61.81, or the closing level of 2 May. For risk-management purposes, a stop-loss can now be placed at the breakeven level.

Towards the downside, immediate support is expected at USD54.52 level, which was the low of 8 Mar. This is followed by USD51.23, the low of 11 Feb. On the other hand, the immediate resistance is now eyed at USD63.81, the high of 20 May. This is followed by USD66.60, or the high of 23 Apr.

Source: RHB Securities Research - 28 May 2019