FxWirePro: Trade WTI crude dips on failure swings at channel resistance, long hedge on bullish crossovers and symmetric triangle break-out

Bears resume on the failure swings at the stiff channel resistance of $64.12 levels, consequently, evidence the steep slumps. More weakness seems to be on the cards as the current prices slide below 21DMA.

Both leading oscillators (RSI & stochastic curves) have been bearish bias. Please be noted that as and when the failure swings coupled with the occurrences of shooting stars and gravestone dojis are observed, subsequently, these bearish patterns evidence the steep slumps (refer circular areas on the daily chart).

Shooting star has occurred, for now, at $63.03 levels to restrain the price rallies below 21DMAs, thereby, one can see bearish history repeating in today’s collapse upto $62.90 levels (today’s lows).

While both leading as well as lagging indicators converge downwards to the prevailing price dips that signal the strength and the intensified selling momentum.

Well, on the contrary, bullish break-out of the symmetric triangle is spotted out from the intermediate-term consolidation phase and retraces more than 38.2% Fibonacci levels (monthly plotting).

From last three-month rally suggests the short-term consolidation phase below the January high is complete and the upside bias is back on track.

Most importantly, the impulsive nature of the rally implies a bullish character shift, especially given the effective test of key support at the March and February lows. With this week’s advance leading to a break of important initial resistance levels, the more immediate focus is on the January highs.

Given the extent of the rally, we sense some near-term pause is likely to develop against these key levels, but eventual new highs appear increasingly likely consistent with our view that the medium-term uptrend is incomplete.

The renewed upside bias is in line with the break of the important 62.25/65 resistance zone for WTI. This area represents the next stiff resistance area after the break-out of triangle trend line in the last October-November.

On a broader perspective, both trend indicators (Exponential moving averages and MACD) show bullish crossovers that indicate upswings to prolong further.

Overall, one can expect more dips in the near terms, and the extension of consolidation phase in the major terms despite weakness in the short run.

Hence, one can think of one-touch binary puts for the next target upto 62.83 levels, whereas longs in futures contracts of far-month tenors are encouraged with a view to arresting potential upside risks.

Holders in a futures contract are expected to maintain margins in order to open and maintain a longs futures position.

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