Another possible price rejection from the 200-day SMA line. The WTI Crude formed a black candle in the latest session and, at the closing, crossed below the 200-day SMA line. The black gold swung between USD55.02 and USD58.30 before ending USD2.94 weaker at USD55.17. As mentioned in our recent reports, the commodity’s price actions around said line is crucial in signalling its next directional bias. Given the possible price rejection from this line in the latest session, it could mean its rebound has probably reached an interim top and that a retracement phase could in the process of developing. Hence, we switch our trading bias to negative.

Our previous long positions – initiated at USD56.20, or the closing threshold of 1 Oct – were closed out at the breakeven in the latest session. As the risk is high for the WTI Crude to enter into a price retracement phase, we initiate short positions at the latest close. For risk-management purposes, a stop loss can now be placed above the USD58.74 level.

The immediate support is still set at USD54.76, which was the low of 20 Nov’s “Bullish Engulfing” formation. This is followed by USD52.39, or the low of 12 Oct. Towards the upside, the immediate resistance is now expected at USD58.74, which was the high of 22 Nov. This is followed by USD63.38 – the high of 16 Sep.

Source: RHB Securities Research - 2 Dec 2019