Bottom line: WTI Crude long term structure continues to remain bullish against $0.01 historic lows in April 2020. Over the short to medium term though, the commodity has managed to carve a meaningful top around $43.75 levels recently. Bears remain poised to hold prices below that.

 Fundamental Outlook:

WTI Crude managed to push higher by over +6.32%, closing at $39.35 yesterday. Hopes on another round of US fiscal stimulus package might have aided Oil’s rally as most risk assets. The commodity would be taking cues from OPEC’s World Oil Outlook this Thursday. Oil prices might remain under pressure if $43.75 is not breached in the near term.

Technical Analysis:

WTI Crude managed to produce an impressive rally yesterday, reaching around $39.70 levels. It seems to be a counter trend rally and bears might be back in control from here. Immediate resistance is seen towards $43.75 mark and prices might hold below that in the near term.

WTI Crude had dropped through $0.01 historic lows in April this year. Since then it has produced a religious uptrend and managed to push through $43.75 levels on August 26, 2020. The subsequent drop through $39.30 mark, might be the beginning of a meaningful corrective drop.

With resistance intact around $43.75 mark, WTI Crude might be preparing to drop towards $26.00 and $16.00/17.00 levels respectively. Also note that $16.60 is fibonacci 0.618 retracement of the entire rally between $0.01 and $43.75 respectively. High probability remains for a bullish bounce if prices manage to reach there.

Most traders might take the recent rally as an opportunity to initiate fresh short positions ($39.00/40.00), with a protective stop above $43.75 and projected targets below $26.00 and $16.00 levels respectively.

Prepared by

Harsh Japee, Technical Analyst.

WTI Crude Chart

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