Maintain long positions. The WTI Crude retraced by USD0.59 to close at USD40.60. We see this as a healthy pull-back due to the commodity hitting the resistance level. From the chart, we can clearly see that the black gold has formed a double bottom on 9 Sep and 2 Oct. For the bullish formation to hold, a lower support level – USD39.00 – must be maintained in upcoming sessions. Meanwhile, the RSI is breaking higher from the resistance line and crossing the 50% threshold, indicating that the bullish momentum is building. Hence, we are keeping our positive trading bias.

As the rebound that started from 9 Sep’s “Bullish Harami” continues to pose a bullish posture, we recommend traders stay in long positions. We initiated these at USD39.22, or the closing level of 5 Oct. To manage risks, we set the stop-loss level at the breakeven threshold.

Support levels are maintained at USD40.50 and followed by USD39.00 – near the 200-day SMA line. On the upside, the immediate resistance is marked at 18 Sep’s high of USD41.49 and followed by the USD42.00 round figure.

Source: RHB Securities Research - 12 Oct 2020