Initiate short positions, as the correction phase may still be extending. The WTI Crude staged a positive intraday price reversal to hand in a USD0.86 gain and closed at USD37.12 – the low was recorded at USD34.36. Despite the relatively strong intraday rebound, we believe the black gold’s correction phase remains incomplete and is likely to extend further. This correction phase set in after the WTI Crude reached a high of USD40.44 on 8 Jun – it is a consolidation process following the sharp rebound post 20 Apr’s historic washout session.

Our previous long positons – initiated at the USD15.06 mark on 29 Apr – were closed out on 11 Jun at USD37.00. Concurrently, we initiate short positions at the closing level of USD36.34. To manage the risk, a stop-loss can be placed above the USD40.44 mark.

The immediate support is revised to USD35.50, ie the latest session’s price point. This is followed by the USD34.36 level – the latest session’s low. Moving up, the immediate resistance is now pegged at USD38.50, and is followed by USD40.44, which was the high of 8 Jun.

Source: RHB Securities Research - 16 Jun 2020