Bears invalidated the case for a rebound; initiate short positions. The WTI Crude ended the latest session on a weak tone, settling USD1.53 weaker at USD49.90 – crossing below the previous support levels of USD50.88 and USD50.45. This in effect nullified our previous expectation for the commodity to stage a rebound, if not resuming its upward move that started from Dec 2018. Instead, the latest negative price signal indicates the retracement phase that started from the high of USD65.65 is resuming. Hence, we switch our trading bias to negative.

Our previous long positions initiated at USD53.29, the closing level of 19 Feb, were closed out at USD50.88 in the latest session. As the bears have regained control, we initiate short positions at the latest close. To manage the risk, a stop-loss can be placed above USD51.75

We revised the immediate support to USD49.31, the low of the “Bullish Engulfing” pattern. This is followed by the USD48 round figure. Moving up, the immediate resistance is now expected at USD50.90, followed by USD51.75 – both are derived from the latest candle.

Source: RHB Securities Research - 26 Feb 2020