Bottom line: WTI Crude long term bullish structure remains intact until prices stay above $0.01, the historic April 2020 lows. Also note that initial resistance has been taken out at $30.00 levels and the commodity may soon produce a corrective drop towards $20.00 mark at least, before resuming higher again.
Fundamental Outlook:
WTI Crude prices continued its rising streak and closed above $34.00 mark yesterday. On the other side Brent Crude prices also rallied and closed around $36.00. The production cut announced last month by the OPEC+ members and rising demand over the re-opening of economies remain major factors for the rise in Oil prices.
DAX including most other markets rallied yesterday as if the escalating tensions between US-China has already been priced in last week. DAX futures managed to rally close to +2.5%, closing around 11400 mark. We expect risk-sentiment to continue its trend over the week as SPX500 and Dow Jones futures also hit 3000 and 25000 levels. The opening of economies post COVID-19 lock down, hopes of potential drug/vaccine development are some factors driving equities higher.
Gold prices continue to consolidate after hitting $1765 levels over the last week. The FOMC is expected to continue its Dovish Tone in the upcoming monetary policy meeting on June 10, and it remains to be seen how Gold prices react to the low interest rate regime by the Fed.
Technical Analysis:
WTI Crude remains bullish over the long term, until prices stay above $0.01 lows. Bulls have since managed to print series of higher highs and higher lows and also taken out initial resistance at $30.00 levels. Ideally, we can expect a corrective drop to resume lower towards $20.00 and $13.00 levels, before rallying further.
Also note that fibonacci 0.382 retracement of the entire rally between $0.01 and $34.00 is seen around $20.00 mark. A bullish bounce remains high probability and it remains to be seen if the corrective drop terminates close to $20.00 levels.
Most traders might have taken profits on aggressive long positions initiated at lower levels. They might remain flat for a while and allow prices to correct lower before initiating long positions again.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude
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