Oil Bounce Back refraining Coronavirus Crush from $50 Support Area leading the price around $50.50 again. The price failed pulling higher touching the $50 support. Let’s check Oil Technical Analysis for more levels and insights.
February 4, 2020 | AtoZMarkets.com – Oil pushed lower quite impulsively despite having certain Divergence emerging along the way. The price continued to push lower as the week started and reached the $50 support area with ease. Though the price did make it below $50, but it could not sustain further downwards and pushed higher again.
As the Chinese companies remain closed for an extended period and transport demand has been lowest, Oil price and Chinese economy continues to struggle. Recently, Bloomberg estimated that China’s Oil demand has dropped by 3 Million Barrels which is the biggest shock since 2008/2009 Financial Crisis.
As the Coronavirus number growing rapidly everyday, Oil is falling consistently without much pullback around the corner. Currently, Refineries are closing down plants and lowering their operations due to less demand in the markets. Though the global economy is suffering from the Coronavirus crisis in China, Oil took the biggest hit among all. As the virus spread continues, Oil might see a new low in the coming days.
Will Oil Bounce Back this time from $50?
As per our earlier expectation, Oil failed to pullback towards $55 after the bounce from $50.50 area yesterday. The price continued it’s Bearish run and pushed below $50 as well. Currently the price did manage to push higher with strong Bullish pressure but still struggling to reside above $50.50.
image: Oil 4 Hour Chart
According to Oil 4 hour chart, the price is still having Bullish Divergence along the way. After the recent Bearish push lower, the Bearish Divergence is still operational and may support the price to push higher for pullback.
Currently, the price is in a non-volatile impulsive Bearish trend having confluence from the dynamic levels. Sine the price broke below $55 area, the Bearish momentum did slow down a bit but was consistent pushing the price lower. As Oil’s demand is falling, so as the price which is having positive correlation currently.
As per current price action in 4 hour chart, the price may push higher towards $53 at least before continuing the Bearish trend. According to recent Bullish 4 hour candle, certain bullish pressure is expected but not quite confirmed until the dynamic levels are broken above.
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Oil awaiting Mean Reversion towards $55
image: Oil Daily Chart
According to Oil Daily price action, the price having Bullish Momentum has greater probability to push higher but a break above $51.50 area is a must. The dynamic level 20 EMA, Tenkan and Kijun line is residing quite higher than current price area. As a result, Mean Reversion towards $55 is what can balance the Market pressure. As the Oil bounced back from $50 Support area, certain upward pressure is expected until it remains above it with a daily close.
To conclude, Oil may push higher but a break above $51.50 will confirm the upward thrust in the market. As the Bullish Divergence is still in process, certain upward pressure may occur the coming days.