Maintain short positions. The WTI Crude saw a strong rebound last Friday, rising USD1.64 to settle at USD63.58. It initially gapped down to start Friday’s session at USD61.89. After establishing the day low at USD61.56 during the European trading hours, the commodity reversed course and rebounded towards the day high at USD64.07 – it settled at USD63.58, forming a Bullish Engulfing pattern. The latest price action showed that selling pressure was subsiding and the bulls managed to established a foothold near the 50-day SMA line. If the RSI crosses above the 50% threshold, the bullish momentum may extend higher to test the next resistance at USD64.38. Conversely, if the black gold falls below the 50-day SMA line again, likely selling pressure will drag it towards USD60.86. As the stop-loss level remains intact, we maintain our negative trading bias.

Traders should stick to the short positions initiated at USD63.82, or the closing level of 13 May. To manage risks, the stop-loss threshold is revised to USD64.53, or the high of 28 Apr.

The nearest support is revised to USD61.95 – 19 May’s low – and followed by USD60.86, or the low of 21 Apr. The immediate resistance is eyed at USD64.38 – the high of 20 Apr – and followed by USD65.81, ie 13 May’s high.

Source: RHB Securities Research - 24 May 2021