Bottom line: WTI Crude medium term outlook remains bullish against $0.01 lows in April 2020. The commodity might have hit resistance just above $41.00 today and could reverse lower towards $24.00 and $15.00 respectively.

Fundamental Outlook:

DAX had collapsed almost -7.0% early this month, along with its peers the Dow Jones and SPX500. The indice had collapsed from 12900 through 11600 before finding some support. Risk sentiment has whipsawed this month, with a day of rally followed by collapse the other day.

Bottom line: Fears of another wave of COVID-19 infections in the US and other countries remain high. A V-Shaped economic recovery might still be far from reality. Geo political tensions are rising amidst the border dispute between India and China, and trade war between US and China. Knowing how fragile the markets remain, a dramatic bearish reversal cannot be ruled out.

Gold prices rallied through $1763.00 yesterday, threatening to break above $1765 highs. The metal may gain further if US Dollar continues to drop (DXY had dropped nearly -0.70% yesterday). WTI Crude trades above $40.00/barrel amidst sustained demand post lock down.

Technical Analysis:

WTI Crude hits fresh highs around $41.20/30 today before pulling back. The commodity trades around $40.30 as we prepare this article, and bears could be inclined to push lower towards $24.00 at least. The RSI on daily chart is also indicating potential bearish divergence indicating a correction lower.

WTI Crude has been carving a series of higher highs and higher lows since $0.01 through $41.20 levels. It has also taken out resistance at $29.00 and $36.00 respectively. A corrective drop towards $24.00 remains high probability, as fibonacci 0.382 retracement of the entire rally is seen there.

Traders might be prepared to book profits on long positions taken earlier around $40.00. They would remain flat for a while, allowing prices to correct lower towards $24.00 and further.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude Chart

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