Bottom line: WTI Crude long term structure remains bullish against $0.01 lows since April 2020. Over the short term though, the commodity might be preparing to drop towards $26/27 levels at least.

 Fundamental Outlook:

DAX price action remained subdued yesterday as the indice manage to close at 12878, marginally higher. The indice along with its counterparts Dow Jones, SPX500 and NASDAQ seems to have carved a potential top last week around 13300 levels. Risk assets (Global Indices) had reversed last Friday.

The rising tensions between US-China, along with the COVID-19 pandemic would add further pressure to Global Indices. Another round of potential risk aversion amidst the US Dollar rally cannot be ruled out yet. The US Dollar Index might also be impacted by the ongoing negotiations over the next round of stimulus package.

Gold has continued its rally and hit fresh highs around $1981 levels before pulling back. The yellow metal has gained against the US Dollar selloff over the past few sessions. Investors might take a cautious approach as Gold remains vulnerable for a drop, around 09 year’s highs.

Technical Analysis:

WTI Crude has managed to print yet another shallow high around $42.50 recently but it is accompanied by a bearish divergence on the Daily RSI as seen here. Hence the commodity remains vulnerable for a sharp drop towards $26/27 levels at least.

WTI Crude has remained in control of bulls since $0.01 lows in April 2020. They have managed to carve a series of higher highs and higher lows through $42.50 levels. High probability remains for a corrective drop, before resuming rally or going sideways.

Also note that the fibonacci 0.382 retracement is seen passing through $26.25 levels. A bullish bounce remains highly probable if prices manage to reach there. Traders might have booked profits on the long positions initiated earlier.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude

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