Maintain long positions. After completing the classic A-B-C two-month correction pattern in early-Nov 2020, the WTI Crude extended its upward movement, which set in following the unprecedented negative pricing seen in Apr 2020. It has managed to cross above the USD50.00 psychological level. However, the advancement is showing signs of developing a minor pause, after the commodity hit the 50-week SMA line on an overbought daily RSI reading last week. Looking ahead, we believe the commodity is likely to extend its minor correction phase for a good part of this week, before staging another attempt to test the cluster of resistances made up of the said SMA line and also the downtrend line (as drawn in the chart), which stretched from the high of Oct 2018. We maintain our positive trading bias.

We recommend traders stay in long positions. We initiated these at USD49.93, or the closing level of 5 Jan. To manage risks, a stop-loss can be placed at the breakeven level.

The immediate support is set at USD52.24 – the low of 14 Jan – followed by USD51.50. Moving up, we are keeping the immediate resistance at USD54.00, followed by the USD55.00 threshold.

Source: RHB Securities Research - 19 Jan 2021