FxWirePro: Short term WTI declining trend camouflages intermediate consolidation pattern – Staying short in near-month futures is not fresh short build-ups

The WTI crude prices have been unable to break and show the sustenance above resistance of 51.25 levels.

Consequently, the current prices dip below DMAs again after rejecting below resistance of 51.25 with bearish crossover on moving average.

On the broader perspectives, the prices have been struggling to clear above 23.6% Fibonacci and 21EMA levels but any breaks above could be deemed as previous consolidation phase to transform into reversal pattern.

For today, during European trading sessions, bears continued to evidence day lows of 45.79 levels.

For now, the commodity price behavior in the short run has been bearish as it has gone well below DMAs especially after the formation of bearish crossover (7DMA crosses below 21DMA) on daily terms.

On the contrary, we could also foresee bounce backs as long as long as major supports hold stronger, well then, expect new bullish environment if 45.77, 44.43 and 42.75 levels decisively.

Fundamentally, WTI crude oil prices showing more strength after the talks of OPEC’s oil production freezing.

Although the buying momentum has been reduced on monthly terms as leading oscillators are not indicative of the current bullish trend, it would be very risky bets for medium term investors to expect dips below 44.43 and 42.75 levels.

Daily RSI signals bearish convergence to the price dips, while Stochs approach oversold zone but still selling momentum is intensified on EOD terms.

MACD indicates the interim downswings are most likely to extend further.

Moreover, today’s inventory check from EIA during the US session today is most likely to stimulate WTI prices.

The EIA is anticipated to announce a spike of one million barrels in U.S. crude stocks. The suspicion remains about OPEC’s ability to deliver a planned cut in output to 32-5-33 million barrels a day to address a global supply glut.

Hence, on hedging grounds, the medium term crude oil traders who wish to invest in this commodity are advised to add shorts in crude futures of November month delivery for targets of 44.43 or 42.75 levels but also add a stop loss of 48.60 levels.

Having mentioned that, shorting near term futures contracts does not mean that the major trend of this energy commodity which is in consolidation phase has bearish potential and shorts in near month futures are just meant for mitigating short term bearish swings.