WTI Crude – Maintaining Bullish Bias Above 99.0 Despite Turbulent Thursday

Is the bullish momentum in WTI Crude over? Yesterday we were still fawning over the fact that prices of WTI managed to climb higher even though fundamentals and broad market sentiment should be pulling prices lower instead, giving us the conclusion that sentiment of WTI is extremely bullish. However, prices reversed sharply during European session, dipping below 99.0 briefly. Prices did reverted strongly back to 100.0 during early US session, but the decline was equally fast, with prices dropping down to 98.65 before bouncing back up immediately once more – wash, rinse, repeat and now we are currently trading slightly above 99.0 after prices climbed down yet again after the 2nd rebound off 99.0 support.

Hourly Chart

This decline is shocking because risk appetite was actually bullish yesterday. US stocks indexes managed to claw back almost all of the losses suffered on Wednesday, while Brent Crude actually traded higher, and the same uptrend was also seen on Copper prices – all these telling us that the decline in WTI is actually out of line.

So does this mean that market is no longer bullish about WTI? Even though prices are trading lower, the fact that 99.0 support remains intact suggest that bullish momentum is still intact. Furthermore, the sharp bullish response every time 99.0 is breached suggest that there are still large number of bulls in the market. With Stochastic indicator showing Stoch curve heading towards Oversold region, a bullish rebound is also favoured which increases the likelihood of a push towards 99.5 if not 100.0.

Daily Chart

The Channel Breakout scenario on the Daily Chart is still intact as well. Yesterday’s bearish candle continue to stay out of the descending Channel, while the Stochastic bullish cycle signal remains in play too, suggesting that a move towards 100.0 is still in the books. Considering that the rally faltered at the 100.0 round figure mark – something that we expected would happen, it is definitely still too early to say that bullish momentum is over. Nonetheless, yesterday’s development is a warning sign for traders who want to go long on WTI based on current bullish sentiment which is not fundamentally driven. Certainly it is risky to go against market sentiment/momentum, but that doesn’t mean we should participate in it either, as market is notoriously fickle minded.

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