Keep short positions. The WTI Crude rebounded sharply yesterday, as it rose USD2.89 to settle at USD71.12 – crossing above the 200-day average line and immediate resistance. The black gold opened higher at USD69.21 and whipsawed to touch the day’s low of USD68.56 during late Asian trading session. Buying pressure then kickedin to shift the direction northwards as it propelled towards the intraday’s high of USD71.55 prior to the close. The latest long white body candlestick – reclaiming above the long term average line – suggests the recent strong selling momentum has been reversed. We expect the positive rebound to continue towards the immediate resistance at USD72.93, supported by the sharp improvement of the RSI from below the 40% level to above 45% yesterday. However, the medium term bearish outlook remains as it has yet to form a “higher high” bullish structure – unless it breaches the immediate resistance level – supported by the RSI still hovering below the 50% level. Based on the medium term outlook, we keep to our negative trading bias until the stop-loss is triggered.

Traders are advised to keep the short positions initiated at USD68.23 – the closing level of 20 Dec. To manage the downside risks, the initial stop-loss threshold is set at the USD72.93 resistance level.

The immediate support is revised to USD69.49 – 1 Dec’s high – followed by USD67.40 – 26 Nov’s low. The nearest resistance is set at USD72.93, ie 29 Nov’s high – followed by USD74.76, ie 22 Nov’s low.

Source: RHB Securities Research - 22 Dec 2021