WTI Price Analysis: Up 3% in Asia, Wednesday’s 18-year low not confirmed by daily RSI

• WTI has bounced up from 18-year lows seen on Wednesday. 
• A technical indicator is reporting a loss of downward momentum.

West Texas Intermediate (WTI) crude is flashing green in Asia amid signs of temporary loss of bearish momentum on technical charts. 

The black gold is trading at $20.46, representing a 3 percent gain on the day, having hit a low of $19.21 on Wednesday. That was the lowest level since February 2002. The previous 18-year low of $19.27 was printed on March 30. 

While prices hit fresh multi-year lows on Wednesday, the widely-tracked 14-day relative strength index, a technical indicator, did not set a lower low. In fact, the RSI bottomed out in the first half of March and has printed higher lows ever since. 

The divergence is indicative of temporary seller exhaustion and suggests scope for a corrective move higher, possibly to immediate resistance at $23.50. 

That said, corrective rallies, if any, will likely be short-lived, as the coronavirus outbreak has caused massive demand destruction, leaving the market oversupplied. The OPEC+, a group of major oil-producing nations led by Saudi Arabia and Russia, recently decided to cut output by 9.7 million barrels per day. However, a majority of analysts believe the deal would fall short of compensating for the loss of demand. 

Daily chart

Trend: Seller exhaustion

Technical levels

Resistance: $23.50 (4-hour chart hurdle), $28.87 (April high). 

Support: $20 (psychological support), $19.21 (Wednesday’s low).