WTI Crude – Bulls Resilient Despite Bearish Momentum and Fundamentals

US benchmark crude fell to a 3-week low on global economic growth concerns following the fall in Chinese exports and Japan GDP miss. Comparing price action of WTI and S&P 500, it is clear that WTI traders are not as bullish as stock traders. Comparatively this does make Oil traders a tad more bearish, but that may be unfair as stocks traders may be unreasonably bullish.

Hourly Chart


Indeed, seeing that prices have stabilized above 101.0 and failed to even test the swing low of Friday (Thursday US session) suggest that WTI Crude bears aren’t really that strong. That is not saying that downside risks are over as bearish momentum from last week’s decline remains in play – led by a surprise increase in Crude inventory stockpiles last week. Nonetheless, it is unlikely that sharp declines in WTI will be seen in the near future, and any sell-off should be met with significant support fighting against it.

There are good fundamental reasons for this support as well, as the energy market continues to hold their breath as the Ukrainian crisis heats up further with Crimean referendum coming up in a few days time. As such, it is understandable that there will be speculators looking for bargain buys in case of war breaking out which will keep prices afloat in the interim.

Daily Chart


Support also can be seen from price action of daily chart. As long as prices stay above 101.0, the rally that started since mid Jan will remain in play, opening up a move back towards 105.0. Should bulls even manage to climb back above 105.0 within this week, stronger bullish acceleration and new 2014 highs would be highly probable. Stochastic indicator agree as Stoch curve has reversed and is threatening to cross the Signal line. Even though this reversal did not happen within the Oversold region, it is possible for Stoch curve to find “support” between 25.0 – 40.0, and as such we should not dismiss a bullish cycle signal if it does materialize.

More Links:
GBP/USD – Slumps Towards Support Level at 1.66
AUD/USD – Ready to Test Key Level at 0.90 Again
EUR/USD – Remains Steady Below Resistance Level at 1.39

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu