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      WTI: 200-day SMA Has Been Broken with Clear Bearish Trend

      Global Inflation
      Summary:

      WTI crude oil has dropped to a low of US$ 90.84 per barrel, only US$0.34 short of the July low of US$90.50. WTI crude oil rose to US$96.55 per barrel today. If it falls below US$90.50 per barrel, it will hit its lowest level since 25 February.

      Sell WTI
      End Time
      CLOSED

      91.500

      ENTRY PRICE

      88.200

      TGT PRICE

      95.800

      SL PRICE

      89.975 +0.046 +0.05%

      2504

      Points

      Profit

      88.200

      TGT PRICE

      88.996

      CLOSING

      91.500

      ENTRY PRICE

      95.800

      SL PRICE

      Fundamentals

      The crude oil has a weak foundation after the EIA on Wednesday reported an unexpected increase of 4.5 million barrels instead of expected production. In addition, OPEC+ said it would increase its production target by 100,000 barrels per day to increase global supply, thus also depressing oil prices.
      The upcoming non-farm payrolls report will be the next major driver for crude oil prices, as the jobs report tends to affect overall market sentiment. Favorable employment data will lead to another 0.75% increase in the Fed rate, which would be negative for commodities as a whole.
      On the other hand, the weak data implied by the leading indicators will give the Fed sufficient reason to slow its tightening cycle. This would support commercial and consumer activity in the coming months, supporting demand for fuel and energy commodities such as crude oil.
      As WTI strives to reach higher levels, however, pessimism persists. The recent rebound stopped at 101.80 near the 30-day SMA. The subsequent drop below US$96.50 indicates that the path of least resistance is still downward. A drop below US$91.10 would trigger further testing of the support at US$85.00, opening further spaces for a bearish reversal in the coming weeks.
      WTI: 200-day SMA Has Been Broken with Clear Bearish Trend_1

      Technical Analysis

      WTI crude oil has been on a downward trend since it failed to break the 121.00 threshold in early June. Although the 200-day Simple Moving Average (SMA) has repeatedly stopped its declines, prices have successfully closed below this important level, supporting a broader bearish trend.
      Momentum indicators suggest that risks are tilted to the downside in the near term. Specifically, the stochastic oscillator is tilted downward in the oversold zone, while the MACD is currently below the 0 axis.
      If selling pressure persists, the recent low of 88.20 could be the first level to break. If breaking this level, bears will challenge the US$85.30 level that has provided support and resistance in the past.
      On the other hand, prices will rise to retest the 200-day SMA, which is currently at US$94.50. Overcoming this barrier, bulls could push the price to a recent high of US$102.00 and then US$114.00, after which it will open up the space for a reversal.
      Overall, the recent sell-off of WTI crude oil will resume as prices successfully fell below the key 200-day SMA. As a result, falling below US$88.20 could attract more selling interest and push prices to new multi-month lows. It is recommended to go short at the highs.

      Trading Recommendations

      Trading direction: Short
      Entry: 91.50
      Target: 88.20
      Stop loss: 95.80
      Deadline: 2022-08-18 20:00:00
      Support: 89.50
      Resistance: 90.88
      Risk Warnings and Investment Disclaimers
      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or signal, or any other product is suitable for you based on your investment objectives and financial situation.

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      Eva Chen

      Analyst

      Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

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      Focus on

      XAUUSD, WTI, USDCAD

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