Bottom line: WTI Crude long term structure remains firmly bullish against $0.01 levels, the April low. As the commodity hits resistance close to $36.00 levels, expect a short term corrective drop to resume soon.  

Fundamental Outlook:

DAX continued to rally yesterday and managed to close higher by over +2.20% above 11900 levels. Its counterparts SPX500 and Dow Jones managed to post moderate gains of +0.30% after slipping into the negative during early hours.

Risk sentiment continues to surprise investors as focus still remains on COVID-19 after effects on Global Economies as they re-open, US-China tensions and the Brexit. The ongoing protests over killing of George Floyd in police custody shall also be closely watched.

WTI Crude rally continued yesterday and it gained over a +1.0%, closing above $35.50. Brent Crude also managed to close higher at $38.66, up over +2.3%. The production output cuts in May 2020 might be extended further in the next OPEC+ meet.

Technical Analysis:

WTI Crude continues to remain in control of bulls as the commodity hits resistance close to $36.00 mark. High probability remains for a corrective drop towards $22.50 levels at least, as bulls might be preparing to take a short term break, going forward.

WTI Crude has carved an impulse rally since the historic lows registered at $0.01 in April 2020. Ideally, the commodity is expected to produce a corrective drop towards at least fibonacci 0.382 retracement of the previous rally, around $22.50. Please note the corrective drop might extend towards $13.00/14.00 levels, which is fibonacci 0.618 retracement, before the next leg of rally resumes.

Most traders might be preparing to book profits on long positions taken earlier and remain flat for now. Aggressive traders might initiate fresh short positions around $35.00/50 levels, with protective stops above $37.90 and projected targets towards $22.00 respectively.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude

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