The Chart of the Week: WTI meets critical support, bears on the look out for a correction before lower
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UPGRADE- WTI has been in a progressive trade to the downside and has met a critical support structure.
- The lower end of the $30s is a focus after some ground is clawed back.
At the end of August, the price of WTI was trading close to the $43.75, the highest level since March when COVID hit the charts.
Now, as we progress through the start of October, the price is well on its way towards a medium-term target in the low $30s, based purely on technical analysis as follows:
Since the analysis, there have been a few updates along the way which included trading opportunities as follows:
- WTI Price Analysis: Bears licking their lips for a 1:5 R/R swing-trading opportunity;
- and the end of the week's day-trading story, WTI Price Analysis: Bombs away, breakeven achieved, fading rallies.
As expected from the monthly and weekly charts, the price crumbled which enabled risk-free trading opportunities towards the targets.
The day trading target of 4R (reward) was achieved at $37.26 when the price made a fresh daily low of $36.66.
The swing trade is running risk-free from a touch below $40:
If the price action respects structure on the 4-hour time frame, then it's safe to expect the following:
On the daily time frame, the Fibonacci's match perfectly with the structure:
On the monthly basis, the lower structure is evident in the bottom of the $30s.
On the positioning data, money managers sharply reduced their longs from the technical resistance and as news struck that the 2nd wave of COVID infections and the lack of new US fiscal stimulus could well set to slow the rate of the demand recovery.
''The building evidence pointing to OPEC+ increasing their exports and production, at the same time as Libya may restart its oil production, were the supply side set factors convincing specs to grow short positioning and cut longs,'' analysts at TD Securities explained, adding:
''Given that the market is concerned about excess supplies and a reduced rate of inventory declines, it is likely that WTI will remain under pressure and there could well be more length reduction this week.''
- WTI has been in a progressive trade to the downside and has met a critical support structure.
- The lower end of the $30s is a focus after some ground is clawed back.
At the end of August, the price of WTI was trading close to the $43.75, the highest level since March when COVID hit the charts.
Now, as we progress through the start of October, the price is well on its way towards a medium-term target in the low $30s, based purely on technical analysis as follows:
Since the analysis, there have been a few updates along the way which included trading opportunities as follows:
- WTI Price Analysis: Bears licking their lips for a 1:5 R/R swing-trading opportunity;
- and the end of the week's day-trading story, WTI Price Analysis: Bombs away, breakeven achieved, fading rallies.
As expected from the monthly and weekly charts, the price crumbled which enabled risk-free trading opportunities towards the targets.
The day trading target of 4R (reward) was achieved at $37.26 when the price made a fresh daily low of $36.66.
The swing trade is running risk-free from a touch below $40:
If the price action respects structure on the 4-hour time frame, then it's safe to expect the following:
On the daily time frame, the Fibonacci's match perfectly with the structure:
On the monthly basis, the lower structure is evident in the bottom of the $30s.
On the positioning data, money managers sharply reduced their longs from the technical resistance and as news struck that the 2nd wave of COVID infections and the lack of new US fiscal stimulus could well set to slow the rate of the demand recovery.
''The building evidence pointing to OPEC+ increasing their exports and production, at the same time as Libya may restart its oil production, were the supply side set factors convincing specs to grow short positioning and cut longs,'' analysts at TD Securities explained, adding:
''Given that the market is concerned about excess supplies and a reduced rate of inventory declines, it is likely that WTI will remain under pressure and there could well be more length reduction this week.''
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