Bottom line: WTI Crude long term structure continues to remain bullish against $0.01 lows. In the near term, the commodity seems to have carved a meaningful top around $42.50 levels as bears remain poised to turn lower.
Fundamental Outlook:
DAX has managed to recover up to +2.71% yesterday, closing around 12646 mark. The indice had come under selling pressure last week, as Q2 GDP figures for Euro Zone contracted further. The recent selloff in DAX and FTSE might be the beginning of a much deeper correction. With rising tensions between the US and China, Dow Jones, SPX500 and NASDAQ might be vulnerable for a collapse.
Gold has managed to hit yet another high at $1986 levels yesterday. The metal could be vulnerable for a reversal as the US Dollar is gaining momentum across the board. If the US Dollar Index (DXY) is able to push further above 95.50/96.00, Gold might face further selling pressure.
US Indices would be taking cues from the ongoing negotiations for extending the Unemployment benefits, which expired on July 31, 2020. Failure to reach an agreement might be seen as a negative and lead to a potential selloff in risk assets, going forward.
Technical Analysis:
WTI Crude might be looking to drop lower towards $27.00 and $16.00 as long as prices remain below $42.50 mark. Bears are looking poised to remain in control from here and push towards $32.50 at least, before pulling back. Looking lower in the near term from current levels.
WTI Crude has been in control of bulls since $0.01 lows in April 2020. It has carved a series of higher highs and higher lows towards $42.50 mark. The entire boundary between $0.01 and $42.50 might be retraced, before deciding further direction.
Also note that $16.50 is fibonacci 0.618 retracement of the above rally. Hence probabilities remain high for a bullish reversal, if prices manage to reach there. Traders might prepare to initiate fresh long positions around $16.00/17.00 mark, going forward.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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