Crude Continues To Fly High Ignoring The RSI

A Tokyo holiday has meant a quiet session in Asia for crude oil as it ignores overbought technical indicators.

Crude oil meandered higher in a  subdued session overnight as the market awaits key U.S. employment data this afternoon. Oil was supported by rhetoric from Saudi Arabia and Iraq that OPEC compliance had been pleasing and that they supported an extension of the production cut agreement through to December 2018. Venezuela’s announcement that it was attempting to restructure all of its foreign debt should continue to be price supportive as well as its almost inevitable default looms ever closer. This may cause supply disruptions from the South American country further tightening supplies.

We continue to advise caution, however. Although both Brent and WTI look constructive on the charts, the RSI’s on both are at very overbought levels. This short-term indicator suggests that despite the confidence in the market, they could be vulnerable to a near-term downside correction. Possibly quite an aggressive one.

Brent Crude climbed 35 cents to close at 60.95 in New York, rising a further 15 cents to 61.10 in early Asia. Brent has a well denoted triple bottom at 60.20 which should form strong support initially. Below this, we see 60.00 and then 59.00 as the next supports. Resistance is at 62.00 with little on the charts beyond there. We assume that more selling will appear at the 63.00 area.

Brent Crude Daily

WTI spot climbed 50 cents to close at 54.55 in New York as U.S. exports hit record highs and have drifted 10 cents higher to 54.65 in early Asian trading. WTI has a congestion zone of a series of daily lows between 53.50 and 53.70 that will lend reasonable support initially. Below here lies the daily uptrend support line at 52.90 with a break opening a drop to 52.00. Resistance is at 55.00 with a break clearing the path to the 56.50 regions.

WTI Daily

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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