Bottom line: WTI Crude long term structure continues to remain bullish against $0.01 lows. The commodity might have hit resistance around $43.50 mark recently and bears might be looking to be back in control. Initial support remains at $38.75 handle.
Fundamental Outlook:
DAX had remained almost flat yesterday closing around 12687 mark. DAX futures trading higher today around 12830, as we prepare to publish. DAX might come under pressure again amidst rising COVID-19 infections in many European Countries including Germany, France and Belgium.
Global Equity markets continue to remain fragile as US-China tensions continue to rise with each passing day. China announced yesterday that it would sanction select American Officials in retaliation to the US sanctions over the last week. Investor sentiment might quickly reverse, triggering a massive risk aversion, if there is no clarity on further stimulus package over extending unemployment benefits.
Gold prices hit fresh highs at $2075 last week before pulling back. The yellow metal has been under pressure with potential profit bookings seen, as it trades around $2000 mark for now. WTI Crude trades just over the $42.00 mark and might come under further selling pressure over COVID-19 fears.
Technical Analysis:
WTI Crude might be preparing to produce a meaningful corrective drop after having hit potential resistance around $43.50 levels. The commodity is trading above $42.00 levels as we prepare to publish and bears might be inclined to push prices lower again.
WTI Crude had earlier dropped from sub $65.00 levels through $0.01 lows as an impulse wave. As discussed earlier, an impulse wave is usually followed by a corrective wave in the opposite direction. WTI Crude has managed to produce a counter trend rally towards $43.50 levels and might be close to turning lower again.
WTI Crude prices have managed to reach just above the fibonacci 0.618 retracement of the earlier drop, seen around $40.50 levels. High probability remains for a bearish reversal from here as traders might be preparing to push lower towards $27/28 mark. A break below $38.75 would confirm a top in place and accelerate lower.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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