Oil price broke below $27.50 key support area, which indicates Bears are currently taking over the market. Oil reached at $26.20 area in a very corrective and volatile manner. Let’s check the Oil Technical Analysis for more levels and insights.
March 18, 2020 | AtoZ Markets – Oil price reached a record low at $26.20 area after breaking below $27.50 key support area. As per the current price action, there is still a hope that Bulls may gain momentum as it remains above $25. Currently, the Oil market is uncertain because of the price war between Russia and Saudi Arabia.
Oil price tried to push higher in the Asian session today because of inventories in the U.S. fall, but the price still remains below $27.50 area. The American Petroleum Institute (API) reported on Tuesday that they are going to reduce of 421,000 barrels of crude oil in U.S. inventories. Last week API reported an increase of 6.407 million barrels and the U.S. Energy Information Administration also reported to the crease of 7.7 million barrels, but this week production demand fell.
Moreover, U.S. Crude Oil WTI Futures rose from 0.26% to $27.4, and the International Brent Oil futures rose $28.95. On the other hand, Saudi Arabia and Russia increase their production as a part of the price war. As a result, the price of oil has collapsed.
Oil Broke Below Key Support with Weak Bearish Momentum
The price is currently trading at $26.90 area but quite weak to sustain the downward pressure. XTI broke below $27.50 support area with a daily bar. Despite the break below the critical level, the breakout does not seem very strong to continue pushing further extensively.
Image: Oil 4 Hour Chart
According to the 4-hour chart, the price of Oil is currently residing near $26.90 area and very volatile to sustain further lower. After rejecting $30 area, XTI declined quite impulsively. As per current price action, Oil formed a Bullish pin bar below $27.50 area and already had a 50% retracement. In this case, this is highly probable that Bulls may take over the market soon and take the price higher towards $36 area in the coming days.
Moreover, the MACD lines are rising upward gradually and residing below the 0.00 level. The MACD histogram volumes formed Bullish regular divergence as the price create a double bottom, which is an indication of Bullish intervention.
Will Oil Bearish Trend Continue or Retrace Higher?
Image: Oil Daily Chart
According to the Daily chart, Oil is currently trading above $26.10 area after the price broke below $27.50 key support. Oil closed below $27.50 with a nose of the daily bar, which is not satisfying to decline further. If the Bulls have a daily close above $27.50 area, Oil may recover higher and head towards $42 area in the coming days.
Besides, the RSI indicator line residing below 30 level from an extended period and remains oversold. The MACD lines are residing below the 0.00 level. The dynamic level of 20 EMA is residing above the current price, along with the Kijun line and Tenkan line. In this case, the dynamic level may pull the price higher towards $42 area as a Mean reversion.
To conclude, Oil is currently residing below $27.50 area and struggling to gain Bullish momentum. If the price close above $27.50 level with a daily bar, the Bulls may regain momentum.