Oil Bearish Pressure slow down near $51.50 support area leading to certain upward pressure recently. The price having confluence may push lower towards $50 area. Let’s check Oil Technical Analysis for more levels and insights.
January 31, 2020 | AtoZMarkets.com – Oil is currently residing above $53 area after certain bounce off the $51.60. This week Oil’s Bearish momentum was quite slow in comparison to previous price action pressure. Though certain Bullish Divergence is in the making, the Bearish Bias is still quite strong to push the price lower.
Oil regained certain Bullish momentum as WHO declared no Travel or Trade restrictions. Despite declaring the Coronavirus situation as global emergency, WHO said that Travel and Trade Restriction is not necessary. After the fall of nearly 4% throughout the week, certain gains on the Oil price does not mean a reversal currently.
As the Coronavirus factor continues to spread, the Oil price may remain under pressure. Recently, Italy, France and British government closed almost all air traffic to China. On the other side, Saudi Arabia is going to hold an output policy meeting in the coming months for deciding on the falling Oil prices. As of the current scenario, until Coronavirus gets a solution, Oil prices may slide further in the coming days.
Oil is being held by Dynamic Level as Resistance
The Oil is facing slow Bearish pressure recently which resulted the price to push higher above $53 area. The price just bounced 10 pips higher of the support level at $51.50. After the bounce, the price formed strong Bullish momentum and pushed 150+ pips higher already. Though the price is retracing higher but Oil price target at $50 is still unchanged.
image: Oil 4 Hour Chart
The price recently formed Bullish Divergence in the process which lead to certain Bullish pressure recently. Despite having Bullish intervention, the Bias and Market flow is still indicating Bearish dominance. The price is held by the dynamic level 20 EMA, Tenkan and Kijun line as resistance. Moreover, the Kumo Cloud area has also widening above the current price area.
The Chikou Span (Green Line) is nearing the price line which might lead to certain corrections but the Bearish Trend is still in place. Recent 4 hour candle showed Bullish rejection off the 20 EMA which indicates the Bearish pressure may regain momentum. According to 4 hour chart price action, as the price remains below the recent lower high at $54, the Bearish Bias may continue further.
Oil Bearish Pressure slowing down for Mean Reversion?
image: Oil Daily Chart
According to Daily Chart, the price formed a Pin Bar Bearish Rejection pattern yesterday. Though the price is showing strong Bullish Pressure, the price may still head lower and retest $51.50 support area before bouncing up higher to revert higher to the Mean. As there is currently no sign of Bullish Divergence or Bullish Intervention except the Bearish Rejection candle, the price may continue pushing lower without any strong Bullish Pressure.
To conclude, Oil price may push further down towards $51.50 area before reverting higher to the dynamic level 20 EMA. Certain bounce from $51.50 will have greater probability as of current price momentum.