章节 22  08/08 WTI: Go Short at the Highs as the Bulls Still Fail to Shake Off the Range-bound Pressure

Abstract: During the Asian and European sessions on Tuesday, the price of WTI crude oil fell below US$81.00, falling more than 1.00% in the day, and continued to lose its upward momentum after rising for six consecutive weeks.

Fundamentals

The reduction of OPEC+ production led to the tightening of the global market, which failed to effectively boost the crude oil market. WTI crude oil closed down by 1.10% on Monday and continued its downward trend on Tuesday, falling over 1.00%, and now it is close to US$82.00 per barrel.

Weak economic growth is still the main theme of falling crude oil prices. In China, the Financial and Economic Affairs Committee announced last Friday that the government will take more measures to stimulate consumer spending and enhance local liquidity. However, officials did not provide important details about the stimulus plan. Chinese government's lack of specific plans has weakened investors' expectations, putting pressure on crude oil prices because investors were concerned about the slowdown in the world's second-largest economy.

At the same time, WTI crude oil has increased by nearly 25% since the formation of the triple bottom structure in June. Because the net long position of large speculators has fallen to the lowest point in 11 years (we have warned that its rising potential is limited), it seems reasonable for prices to fall back. Since then, large speculators and fund positions have begun to cover bears, which is an important factor leading to weak prices. We have indeed seen a decrease in the total number of bulls recently, which is also an ideal situation for a healthy bullish trend.

This is not surprising, considering that the news of the extension of production cuts and the new round of stimulus measures in China have weakened investors' expectations.

In terms of data, crude oil prices will get clues from the inventory data released by API and EIA later this week, and the substantial reduction in inventory will indicate that demand is picking up. On the other hand, rising prices may mean a downward trend in crude oil prices, because it means an increase in the supply level.

The inflation report of the U.S. economy may also affect the prices of crude oil and other commodities later this week, as strong price pressure may rekindle people's hopes for further tightening of the Fed's policies. In turn, this may lead to a stronger USD due to rising borrowing costs and risk aversion, thus suppressing crude oil.

On the other hand, weak CPI and PPI data may remind investors that the decision of the Federal Open Market Committee in September may still be suspended. Coupled with the weak non-farm employment data released last week, it may bring greater downward pressure on the USD and boost risky holdings such as commodities.

Technical Analysis

After two consecutive trading days of decline, WTI crude oil price is still above the upward trend line in the 4H timeframe. Nevertheless, a downward death cross is formed in the 4H timeframe, which can be seen as a bearish divergence; Therefore, falling below the support level may trigger a reversal of the rally.

Meanwhile, stochastics made lower highs while prices made higher highs. Similarly, the Relative Strength Index made lower highs while the price of crude oil made higher highs, suggesting that bearish pressure may be intensifying. Both oscillators have room to fall before reaching oversold territory to reflect short-seller exhaustion; therefore, the price may continue to follow.

However, the 100 SMA is still above the 200 SMA; therefore, resistance could reverse its downward momentum. In other words, the uptrend could still resume. The key will be the fight for the threshold of US$79.50. Meanwhile, the gap between the indicators is widening, reflecting the increasing bullish momentum.

Nonetheless, we still believe that the WTI crude uptrend has not been able to break out of its range-bound pressure since the formation of the triple bottom structure in June, and we expect that this momentum will still need to be maintained for some time. It is recommended to go short at the highs.

08/08 WTI: Go Short at the Highs as the Bulls Still Fail to Shake Off the Range-bound Pressure-第1张图

Trading Recommendations

Trading direction: Short

Entry price: 81.70

Target price: 74.35

Stop loss: 83.00

Deadline: 2023-08-22 23:55:00

Support: 79.71, 78.90, 77.21

Resistance: 82.14, 82.90, 84.53

关于我们 用户协议隐私政策风险披露认证协议社区准则 帮助中心 意见反馈
App Store Android

风险披露

金融工具交易属于高风险投资活动,有导致部分或全部投资本金损失的风险,可能不适合所有投资者。本网站所包含的任何观点、聊天信息、通知、新闻资讯、研究调查、分析、价格或其他信息都是作为一般市场信息提供的,仅供教育和娱乐之用,并不构成投资建议。 所有的观点、市场行情、推荐或任何其他内容可能随时会改变,恕不另行通知。Trading.live对因使用或根据这些信息而直接或间接造成的任何损失或损害概不负责。

© 2024 Tradinglive Limited. All Rights Reserved.