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Crude oil (WTI) statistical and technical analysis

The current price of Crude Oil (WTI) is 63.58 (May 21, 2021). This commodity has recently traded sideways in an important area. Rising inflation could also affect the future price of oil. Let’s now look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.77% and -1.96% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.92% and -0.94% . Friday´s return was 2.47% , which is above average, but still within the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and -1 for price indexation. It is currently in a slightly negative phase of the cycle. Both scorings range from -3 up to 3 . The estimated cycles development based on our analytical system is shown in the following chart.

WTI daily price indexation Source: WALFIR

Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. WTI is in bearish sentiment in the case of the monthly MA, after falling below it recent days. As we can see in the chart below, the 6 months and annual MAs still support bullish sentiment.

WTI daily price development Source: WALFIR

Since the beginning of this year, we have witnessed more upward trends, the maximum level of which has reached 7 consecutive days. Downward trends did not exceed more than 4 days in the same period. However, the maximum decrease was 11 days in the measured period. We could use the average long-term ATR (Average True Range) obtained from daily data (3.74% ) to estimate Stop Loss orders for our positions. The current value is 3.61% . Approximately 90% confidence interval (return between -3.6% and 3.6% ) is shown in the histogram below by a red rectangle.

WTI daily return distribution Source: WALFIR

We could use the last decile of low to high returns (6.00% ) to estimate Profit Targets, as shown in the chart below.

WTI daily low to high distribution Source: WALFIR

The basic technical analysis still points to a slightly positive sentiment with a sideways price development in recent months. The WTI is currently very close to the short-term moving average and the psychological level of 60.00 . This could be strong support for bulls. In addition, this scenario could be supported by a divergence between price development and the RSI created since April. Rising inflation could bring the price to a psychological level of 70.00 . However, if there was a further drop below 60.00 , the next stop could be the demand zone (green rectangle), where is also the Fibonacci retracement level of 23.60% , along with the psychological level of 50.00 and the long-term moving average.

WTI basic technical analysis Source: TradingView

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...

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