Crude Oil, WTI, Retail Trader Positioning, Technical Analysis – IGCS Commodities Update
- Crude oil prices extend gains from last week
- More retail traders are becoming bearish
- Will positioning hint at WTI clearing resistance?
Crude oil prices extended higher over the past 24 hours, continuing a near-term winning streak since last week. In response, retail traders have been cautiously increasing downside exposure. This can be seen by taking a look at IG Client Sentiment (IGCS), which can at times function as a contrarian indicator. With that in mind, could WTI continue rising from here?
Crude Oil Sentiment Outlook - Bullish
According to IGCS, about 50% of retail traders are net-long crude oil. With the overall balance of exposure almost perfectly split between upside and downside bets, the near-term changes in positioning could offer a better outlook of how sentiment could inspire price action. In this regard, downside exposure has increased by almost +3% compared to yesterday and +6% versus last week. With that in mind, recent changes in positioning hint that the price trend may soon reverse higher.
| Change in | Longs | Shorts | OI |
| Daily | 0% | 22% | 4% |
| Weekly | -4% | 13% | 0% |
On the daily chart below, WTI has climbed to the 81.56 resistance zone established earlier in August. Clearing this point, as positioning is hinting at, could open the door to revisiting the August peak of 84.84. That would also undermine the breakout under the rising trendline from late June.
Meanwhile, a bullish Golden Cross remains in play between the 50- and 100-day Moving Averages. This has been offering an upside technical bias. In the event of extended losses, keep a close eye on the 38.2% Fibonacci retracement level of 77.96. Clearing this line would place the focus on the moving averages, which may reinstate the upside technical bias.
Crude Oil Daily Chart
-- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
