FxWirePro: WTI crude bears buzz on channel support breach, bulls capitalize on asymmetric triangle break-out – Uphold long hedge

Chart and candlestick pattern formed - Bulls in the major trend so far roaring ever since the break-out above asymmetric triangle resistance with bullish EMA and MACD crossovers on monthly plotting (refer monthly chart). Whereas bears in minor trend managed to breach below rising channel support and failure swings at the same level signals weakness (refer daily chart).

Leading and lagging indicators (RSI, stochastic curves, moving average and MACD) are in tandem with the upswings breaking-out symmetric triangle resistance and the extension of the consolidation phase by retracing more than 38.2% Fibonacci retracements, the uptrend is now on the verge of retracing upto 50% on monthly terms.

On the contrary, bears have resumed in short run at rising channel baseline which is now acting as the stiff resistance, failure upswings at this channel resistance with downward convergence in leading oscillators (RSI & stochastic curves) are signaling more weakness on daily plotting.

In the recent Bull Run, WTI crude prices have managed to hit 3 years highs of $66.63 but couldn’t sustain that level (refer monthly chart). Thereby, the bulls in the major trend seem to be exhausted at this juncture.

For today, the prices have been drifting in sideways but below 7DMAs as investors seek better clarity on official weekly data from the US today, weekly inventories check by US EIA is scheduled tomorrow, while both leading oscillators have been signaling selling sentiments.

On a broader perspective, let’s have a glance through the major trend that was bearish now has gone into consolidation phase that was jerky way back in mid-2015.  From massive slumps from the peaks of $114 levels shouldn’t be disregarded and jumping to conclude this as a robust uptrend would be unwise, it is just 38.2% retracements.

More rallies on the cards upto next major resistance at $70.18 levels upon bullish MACD and EMA crossover (7EMA crosses over 21EMA).

Major supports are observed at $59.83-60 levels.

Trade tips: As the bullish momentum appears to be intact in medium terms, on hedging grounds at spot reference: 61.88, one can keep the potential bullish risk of this pair on the check by adding longs in futures contracts of mid-month tenors with a view to arresting upside risks, we reiterate that it is wise to use dips to deploy long hedges using these WTI derivative contracts but using mid-month tenors as well.

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