Crude Oil Price Nosedives Below $48 on Coronavirus Pandemic Fears

Crude oil price dropped below $48.50 area quite impulsively with a daily close. Bearish pressure may continue further towards the $45 area in the upcoming days. Let’s check the Oil Technical Analysis for more levels and insights.

February 27, 2020 | AtoZMarkets –  The price of crude oil continued pushing lower after rejecting the $50 resistance area and may extend further. After retracing from the $50 resistance area, Bears are actively pushing the price downward. It may also continue further with the target towards $45 area, which is 2018’s low.

Crude Oil Price Fundamental Highlight

Oil falling rapidly as Coronavirus spreads outside of China. The numbers of new Coronavirus infections are reported overseas, which go beyond the numbers infected in China. Italy and Iran are currently on high alert as the infections spreading faster. The investors are in fear that Coronavirus may affect the global economy further. As a result, Asian share markets fell drastically today. On the other hand, U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels.

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Moreover, New York energy hedge fund Again Capital’s partner Jhon Kilduff recently said,” The Coronavirus is only leaving Oil Bulls nowhere to hide, even with the relatively positive data.” Saudi Arabia is pushing OPEC to agree on 600,000 barrel per day supply cut to calm the market and stop the price from dropping further. On the other hand, Russia has rejected the plan and said further discussions are needed before they consider any supply cuts.

Oil Price Decline and May Continue Lower

Crude oil price declined below $48.50 area recently and may continue toward $45 support soon. After retracing from the $50 resistance area, Bears push the price down impulsively. According to the current price action, Oil may retrace toward the $48.80 area before it drives down to the next support.

Crude Oil price

image: Oil 4 Hour Chart

According to the 4-hour chart, the dynamic level of 20 EMA is residing near $50 area, which may pull the price higher as Mean Reversion. Additionally, The Kijun line and the Tenkan line is also residing above the price, which may work as confluence along with dynamic level 20 EMA. On the other hand, the MACD lines are residing below 0.00 line, along with the MACD histograms which indicates the strength of the Bears in the process.

Bearish Trend May Continue Further Toward $45 

According to the Daily chart, oil price is currently residing near $47.80 area and trying to continue the Bearish trend. Oil broke record below $48.50 with a daily close yesterday. Bears are impulsively takeover the market after breaking below $50 support area. Currently, the dynamic level of 20 EMA is residing above $50 area, which may pull the price as Mean Reversion towards $50 area again. If price finds resistance at the dynamic levels as well as the Horizontal level, Bearish pressure may continue further.

Crude oil price

image: Oil Daily Chart

Additionally, the MACD lines were residing below 0.00 level and crossed each other to the downward. It is a good indication that Bearish momentum may extend further in the coming days.

To conclude, Oil is now residing near $47.80 area which may continue further lower after retracing toward $50. If Oil has a daily close below $50, Bearish pressure may continue down towards $45 in the upcoming days.

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