Bottom line: WTI Crude long term structure continues to remain bullish against $0.01 lows. Over the short term though, the commodity might have carved an intermediary high around $43.75 levels. Bears might remain in control for now and prepare to push through $26.00 mark at least.
Fundamental Outlook:
DAX had rallied through 12880 highs yesterday, closing +2.36% around 12860 mark. Futures are trading around 12900 as we prepare to publish. Global indices along with Dow Jones and SPX500 managed to close higher by +1.78% and +1.92% respectively. Hopes of another stimulus has triggered the recent rally in risk assets but investors might remain cautious over further optimism.
WTI Crude prices have remained stagnant after hitting $41.46 mark on September 18, 2020. The commodity trades around $40.35 for now and might remain under pressure over the next few weeks. The OPEC might not cut further production but sluggish demand over another round of COVID-19 infections might put pressure on the commodity.
Gold had dropped to $1848 last week, breaking critical support at $1862 mark. The yellow metal might continue to lose its shine as the US Dollar might strengthen further over the next few weeks. The metal has seen some bids coming through around $1850 mark as it trades higher towards $1881 as we prepare to publish today’s update.
Technical Analysis:
WTI Crude had managed to produce a counter trend rally towards $41.46 mark, after having dropped through $36.00 lows earlier. The commodity might have carved another lower high around $41.46 as bears might be preparing to turn lower again. A drop below $36.00 might confirm that bears are prepared to push towards $26.00 levels in the near term.
WTI Crude had dropped through $0.01 historic lows around April 20, 2020. Since then, the commodity had remained in control of bulls and managed to carve a religious uptrend towards $43.75 highs in mid-September. Bears might be inclined to produce a meaningful corrective wave going forward. The drop between $43.75 and $36.00 has also been retraced and bears might resume lower soon.
Also note that the fibonacci 0.618 retracement of the entire rally between $0.01 and $43.75 is seen towards $16.50/60 levels. High probability remains for prices to drop towards those levels, going further. Bulls might want to regain control from around $16.00/50 mark.
Most traders might be preparing to initiate fresh short positions around $40.00/50 resistance zone, with protective stops above $43.75 and projected targets towards $26.00 and $16.00/50 respectively. Only a sustained break above $43.75 might change the near term bearish structure.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude
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