WTI Crude Oil Continues Trading Sideways – Quick Trade Plan - Forex News by FX Leaders
WTI Crude Oil Continues Trading Sideways - Quick Trade Plan

WTI Crude Oil Continues Trading Sideways – Quick Trade Plan

Posted Wednesday, May 27, 2020 by
Arslan Butt • 2 min read

WTI crude oil prices flashed red and dropped from the daily high to below $34.00 mark while represented 0.34% losses on the day. As we are all well aware, WTI crude oil recently hit the intraday top of $34.44 but stepped back due to the broad-based US dollar recovery in the wake of risk-off market sentiment. Additionally, the reason for the fresh declines could also be attributed to the downbeat comments by the International Energy Agency (IEA). At the moment, WTI crude oil prices are currently trading at 33.72 and consolidating in the range between 33.67 and 34.32.

On the other hand, the decline in oil prices was further bolstered by US President Donald Trump’s decision to impose sanctions on China by the end of the week over its effort to impose national security laws on Hong Kong which kept the risk sentiment under pressure and contributed to the crude oil downfall.

In addition, the reason for the risk-off market sentiment could also be attributed to the news about a large rally which was expected today in Hong Kong to protest China’s proposed new national security laws. Meanwhile, the US Senator Marco Rubio warned further difficulties for China if they move ahead with Hong Kong Security Bill. As a result, the 10-year US Treasury yields fail to keep the previous day’s bullish momentum while dropping to 0.695%.

At the USD front, the broad-based US dollar took bids in the wake of safe-have demand in the market after Trump promised US reaction to the new security law by the end of the week. Meanwhile, the US Dollar Index that tracks the greenback against a basket of other currencies reported gains of 0.26% to 99.168 by 12:06 AM ET (5:06 AM GMT), with investors turning to the safe-haven asset.

It should be noted that the IEA recently lowered its energy investment forecast by approximately $400 billion, the biggest ever annual contraction. Apart from this, the OPEC and producers including Russia, a grouping referred to as OPEC+, are cutting their output by approximately 10 million barrels per day in May-June to support prices as measures.

Moving on, the ongoing USD strength could keep oil’s upside trend limited. On the data front, Weekly Crude Oil Stockpiles from the American Petroleum Institute (API), prior -4.8 million barrels, will likely offer an additional catalyst to watch.

WTI Crude Oil Continues Trading Sideways - Quick Trade Plan

Daily Support and Resistance

S1 31.39
S2 32.79
S3 33.49
Pivot Point 34.19
R1 34.89
R2 35.59
R3 36.99

WTI crude oil prices are trading with a bearish bias of around 32.25 level, holding just below an immediate resistance level of 34.71 and 36.25. On the lower side, WTI prices may find support at 31.55 and 29.20 level. The MACD and RSI are also supporting bullish bias in US Oil. The idea is to trade bullish above 31 to target 29.10 and 28.16 today.

Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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