Oil Bulls Struggling to push Higher from $50 Support as Coronavirus spreads further. As the number of infected rises, Oil prices dips lower. Let’s check Oil Technical Analysis for more levels and insights.
February 5, 2020 | AtoZMarkets.com – Oil sustained the Bearish momentum having non-volatile trend at the edge of $50 support area. Yesterday, the price did push higher but could not break above $51.50 area and rejected with strong Bearish pressure.
Oil recovered after dip below $50 support area. As the Demand felt drastically due to Coronavirus spread in China, Saudi Arabia pushed for further production cut to keep up with the downturn. Oil is still down by 20% since January 2020. Saudi Arabia has reduced further supply as the consumption dropped rapidly. Moreover, Saudia Arabia running into Russia’s resistance may harm Saudi Arabia’s economy as Russia’s budget is stronger to bear lower prices of Oil.
There are forecast of wiping out of one-third of oil demand growth this year due to the Coronavirus crisis. Though price is showing certain bounce around $50 area but still the Bearish bias is strong to push the price much lower. A strong break below $50 may lead the price much lower in the coming days.
Oil Resisting further downward move below $50
OPEC is currently looking forward to keep the Oil price at least above $50 by reducing the supply. After the Coronavirus hit in China, Oil price drastically fell which is still continued. The price currently did manage to push above $50 again but still under strong Bearish pressure.
image: Oil 4 hour chart
According to 4 Hour Chart, Oil regained certain Bullish momentum and reside above $50 again. Yesterday, the price did manage to sustain a consistent bullish pressure but Oil rejected off the $51.50 area along with dynamic level confluence.
The Bullish Divergence did manage to push the price higher but the Bullish momentum cannot be established until $51.50 area is broken higher. The Bearish trend has turned volatile since last week but Oil unsettled until a break below $50. So, either way, the price is under a strong correction though the price is heading lower. As Oil Bulls Struggle to push higher, the Bears may continue to push lower.
Oil to push Higher this time despite the Struggle?
image: Oil Daily Chart
According to Daily Chart, the price formed Inverted Hammer candle formation yesterday after rejecting off the $51.50 area. MACD lines are still sloping lower with no indication of Bullish momentum. So, as per current price action, a break above $51.50 is required to confirm upcoming Bullish run but Inverted Hammer formation does indicate Bullish pressure in the making.
To conclude, Oil is still indecisive with the upcoming Bullish momentum before breaking above $51.50 area. Though there are certain indication of Bullish intervention in Daily chart but a break below $50 will lead to further downward pressure as the Oil Bulls struggle.