Maintain short positions. The WTI Crude traded in a range-bound fashion during the latest session. It hit a low and high of USD47.77 and USD48.58, before settling USD0.12 higher at USD48.52. The black gold has been developing a rebound over the past week, following a sharp retracement from the USD49.28 high recorded on 18 Dec 2020, to the low of USD46.16 on 23 Dec 2020. At this juncture, we see the rebound as counter-trend, implying that the risk of the commodity extending its retracement is still high. This correction phase set in following the commodity’s sharp multi-week upward move, which took place between early-November and 18 Dec 2020 – and saw the RSI reach an overbought reading after prices came close to the USD50.00 psychological level. We maintain our negative trading bias.

We recommend traders maintain short positions. These positions were initiated at USD47.02, or the closing level of 22 Dec 2020. To manage risks, a stop-loss can be placed above the USD49.28 mark.

Support levels are pegged at USD47.50 – the low of 28 Dec 2020, followed by USD46.16, or the low of 23 Dec 2020. Conversely, the immediate resistance is set at USD49.28, or the high of 18 Dec 2020, followed by USD50.00.

Source: RHB Securities Research - 4 Jan 2021