Oil breaking $58.00 may lead Oil Bearish Continuation despite recent expectation emerging Bullish trend. A break below the level may lead to Bearish pressure. Let’s check Oil Technical Analysis for more levels and insights.
January 22, 2020 | AtoZMarkets.com – Oil has been quite volatile with the with the recent price action. The price recently established a strong Bearish momentum which struggled at the edge of $58 area. Despite the bounce above $58.50 recently, the price again pushed lower below $58 support.
Recently, International Energy Agency (IEA) forecasted market surplus for the upcoming 6 months. This statement not only faded the Libya disruption concern but also resulted to decline in Oil price. In World Economic Forum meeting, Head of IEA Mr. Fatih Birol also stated that “there are abundance of Oil and Gas supply for which recent incidents like Iranian General kill and Libya unrest did not quite increase the price”.
According to Reuters poll, despite such positive statement, U.S. Crude Oil Inventory has fallen for Second Week. Though there are certain possibility of price rising higher as Supply declines but a break below $58.00 may lead Bearish Continuation.
Oil below $58 can lead to $50?
Oil is currently residing below $58.00 area in the intraday chart. The price is currently quite non-volatile with the Bearish Momentum. It has also got confluence from the dynamic levels while MACD is showing no sign of Bullish Divergence in the process.
image: Oil 1 Hour Chart
The price is heading lower towards $57.35 support area which if breached then the price may touch $50 area as well. The dynamic levels like 20 EMA, Tenkan and Kijun line is residing above the price while Kumo Cloud resistance is widening. As per Price Theory, the price has greater chance to reach $57.35 and lower in the coming days. So, if the price reach $57.35 area but MACD histogram shows no strong bearish pressure then a Bullish Divergence may emerge. Therefore, a Bullish Divergence off the strong support like $57.35 can lead the Bulls to regain momentum. Despite the fact, Oil break lead Bearish pressure to take over in the process currently.
Only Hope for Oil Bulls
Despite the recent sustainable Bearish pressure, there are still chances for Bulls to jump in. According to Daily Chart, the price is residing at the edge of strong Kumo Cloud Support. Moreover, the MACD lines are flat at the edge of 0.00 area while Histogram squeezing higher. As per preceeding Bullish trend, there are higher chance of trend following and price pushing higher towards $60. In contrary, if the price sustains below $58 area with a daily close and manages to break below $57.35 area then the strong counter may occur.
Currently, the Oil price pushing below $58 support is an indication of presence of Bears in the market. A daily close above or below $58 will open doors for upcoming possibilities.
To conclude, Oil breaking below $58 indicates Bearish intervention in the Bullish trend. A break below $57.35 will lead to sustain Bearish pressure, until that a break above $58 will lead to Bullish continuation.
Read More – 2020 Bangladesh Stock Market Crisis Outlook