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Fundamentals

During Thursday's (December 14th) Asian session, WTI crude oil ascended slightly, and it is currently trading at 70.0 dollars/bbl. Yesterday, WTI crude oil rebounded from the bottom. Despite once dropping below 68, WTI crude oil rebounded with oscillation and closed the daily chart higher. The crude oil de-stocking continued, and gasoline stocks did not increase as expected. Moreover, the Fed shifted its stance in the rate decision overnight and released dovish signals unexpectedly, heating the risk assets. For sure, crude oil is one of them but the growth was not significant. We should not expect a great rise as the oil market is now dominated by bears. Bulls need to take time to wait for rising space. When the supply/demand situation improves, interest rate cut expectations will become the icing on the cake, which may then largely boost the oil price. Now, many factors are shifting to the positive side, and it will certainly happen when the logic of Sell the Rumor comes true. If the situation continues to improve marginally, oil bears will also become bulls in the future. However, we do not predict the market but trade according to price patterns. The crude oil market has now changed completely. More specifically, the participants, fundamentals, cycle, sentiments, macro factors, and a variety of other factors develop complexly. Although it may seem complex, one main factor will dominate the market in one phase. When we see that one main factor, we can capture the opportunity to make considerable profits. Anyway, investors always insist on a signal aspect, which will affect the trading result badly.

News: Last night, the Fed kept interest rates unchanged, but the dot plot indicated that the Fed would cut interest rates 3 times next year. Moreover, the federal funds rate would end at 3.75% or 3.50%.

Stocks: As of the week of December 8th, EIA crude oil inventories dropped by 4.25 million barrels unexpectedly. At the same time, the EIA gasoline inventories also increased less than expected by only 408,000 barrels.

Today's focus: U.S. retail sales data for November (monthly and annual rate) and the initial jobless claims.

Technical Analysis

WTI crude oil descended in the Asian session yesterday. The decline was slight, just breaking below 68. Then the price rebounded immediately to 70, closing the daily chart higher. This bull candle plays an important role in boosting the bulls' confidence as it shows a stabilization signal after a big bear candle covered 4 bull candles in the daily chart. Therefore, we will not keep going short, but go long with small stop-losses after retracements and take profits step by step to protect our funds. At the moment, oil bears dominate the market, and they will not allow a huge recovery before they leave. Nevertheless, it is also difficult for bears to press down the price again, and the best way is to wash trade with oscillations. Furthermore, it is hard to take profits by the end of the year instead of stop loss. Technically, after the rebound yesterday, the bullish momentum has been released in the 1H chart, and the price will surge further if a consolidation takes place in the Asian session. Besides, there is a golden cross in the 4H chart, and in the daily chart, MACD also has the potential to form a golden cross in the oversold area. Therefore, we keep a bullish view and recommend investors not go short but try to go long when WTI crude oil retraces to 69.  

Trading Recommendations

Trading direction: Long

Entry price: 69.000

Target price: 72.500

Stop loss: 68.500

Support: 68.000/67.000

Resistance: 72.500/74.500