Initiate short positions as retracement risk is high. The WTI Crude experienced a relatively wide trading range of USD37.31 and USD40.54 – before ending USD2.36 lower at USD38.01. The negative session came after the commodity filled 6 Mar’s “Downside Gap” in the prior session. The closing also placed it back below the USD40.44 mark – indicating a potential price reversal signal. We believe the possibility is high that the black gold is now likely ready to stage a correction phase, following the completion of the rebound between 20 Apr’s low and the recent high of USD41.63. Switch our trading bias to negative.

Our previous long positions initiated at USD40.46, ie the closing level of 22 Jun, were closed out at USD38.40 in the latest session. Concurrently, we initiate short positions at the latest close. To manage risk, a stop-loss can be placed above USD39.50.

The immediate support is revised to USD37.00, near the low of 18 Jun. This is followed by USD35.90, the price point of 12 Jun. Moving up, the immediate resistance is eyed at USD39.50 – derived from the latest candle. This is followed by USD41.63, the high of 23 Jun.

Source: RHB Securities Research - 25 Jun 2020