Bottom line: WTI Crude medium term outlook remains bullish against $0.01 lows in April 2020. Bulls have managed to break above resistances at $36.00 and $38.00 respectively. One can expect at least a corrective drop towards $30.00 mark.
Fundamental Outlook:
DAX had inched higher towards 12900 levels before reversing sharply over the last week. The indice had closed lower by almost 6%, at 12000 mark on Friday. As risk aversion continued yesterday, the indice had print fresh lows at 11577, before pulling back. The reversal in risk sentiment over the last week, has been mainly attributed to a second wave of COVID-19 infections.
It remains a matter of time that Global Indices continue to sell off over the next several weeks as infections continue to rise as economies re-open, especially Asian Countries. The last 10 weeks sentiment has taken just a few trading sessions to reverse and might continue further.
Oil prices may get a boost over the extended period of supply cuts starting July. The cut would include close to 10 million barrel per day and could add further to Oil prices rising. Last week, WTI Crude had peaked through $40 before easing off o $37 (current price), while Brent Crude had risen through $43.40 before pulling back.
Technical Analysis:
WTI Crude bulls had managed to print $40.00 over the last week before reversing lower. The commodity is trading close to $37.00 as we write this article and could be preparing to produce a corrective drop towards $30.00 and $15.00, going further.
WTI Crude prices had carved historic lows at $0.01 in April and since then bulls have remained in control. A series of higher highs and higher lows was carved taking out resistance at $36.00 and $38.00/39.00 respectively.
Traders might be preparing to book some profits on long positions taken earlier and choose to remain flat for a while. Aggressive traders might initiate fresh short positions with protective stops above $41.00 and projected targets towards $30.00 and $15.00 respectively.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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