Oversold but no reversal signals; maintain short positions. The WTI Crude formed a black candle to cease the latest session at USD56.59, indicating a decline of USD2.22. Intraday tone was negative as it generally trended lower for the whole session, the high and low were posted at USD59.70 and USD56.33. The retracement that started from the high of USD66.60 on 23 Apr is now flashing out an oversold reading. However, in the absence of price confirmation to suggest an interim low has been established, we are keeping our negative trading bias.

As the ongoing multi-week correction phase – which in our view meant to correct the upward move that took place between the low of USD42.36 on 24 Dec 2018 and the above mentioned recent high – is still not showing signs of completion, 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 be placed at above USD59.70.

Immediate support is eyed at the 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 expected at USD59.70, the high of the latest session. This is followed by USD63.81, the high of 20 May.

Source: RHB Securities Research - 31 May 2019