September 24, 2019 | AtoZ Markets - Oil has tumbled below $60 after the last week surge. At the start of the last week, the market reacted to the news that large Oil facilities in Saudi have been attacked. Oil which was trading around $55 before the news, quickly surged to $62. Before the end of the week, however, the Oil price fell to $58. This week, the price is oscillating between $55 and $58. Will the rally continue above $63 or price would drop to $54 or below?
The US WTI Crude Oil is under the bearish pressure on Monday and Tuesday. The commodity fell in response to the declining global economic growth. The current price action signifies a big battle currently ongoing between buyers and sellers. However, crude oil decline is limited after the September 14 attack on Saudi Oil facilities. The global production was expected to drop by 6%. Meanwhile, there are reports that the repairs of the facilities are ongoing and 75% of the depleted Saudi crude oil output may have already been recovered. This sounds a little bit bearish as supplies gear up.
Crude Oil analysis: important price levels
Resistance Levels: $63.3 and $66.6 are the main near-term resistance levels. If these levels are breached upside, we should see a hit of $70.
Support Levels: $50.6 and $42 are the near-term support levels. If the price does not recover quickly from the current dip, we might see a hit of $50.6 first and then $42.
Crude oil Elliott wave analysis
When Oil price dropped from $77 in October 2018 to $42 in December 2018, it completed a bearish impulse wave. A 3- wave bullish correction followed to $66.5 in April 2019. As the chart below shows, the price still remains under the bearish pressure.
If Oil price breaks below the broken blue trendline, we will most likely see a hit of $50. If $50 is broken also, $42 won't be far from sight. Unless another big surge happens above $66, the bears will most likely win the near-term battle