Initiate short positions as the bulls are on the weak side. The WTI Crude ended the latest session on the weak side. Intraday, the commodity filled 16 Sep’s “Upside Gap” and tested the 200-day SMA line with the low of USD55.55. This was before it ended USD0.80 lower at USD56.49. The commodity’s recent sharp retracement from the high of USD63.38 suggests there is no positive follow-up for the said “Upside Gap”. This implies the rebound that started from an area near the USD50 support level may have reached an end. Hence, we switch our trading bias to negative. Our previous long positions initiated at USD57.10, or the closing level of 13 Aug, were closed out at the breakeven in the latest session. On the bias that the commodity is now trading in a retracement mode, we initiate short positions at the latest closing. For risk-management purposes, a stop loss can be placed above USD59.54. Immediate support is set at USD54, the low of 12 Sep. This is followed by USD50, a round figure. Moving up, immediate resistance is now expected at USD59.54, the high of 19 Sep. This is followed by USD63.38, the high of 16 Sep.

Source: RHB Securities Research - 26 Sept 2019