Oil correction phase continues and may extend further. Oil became corrective and volatile between $48.50 – $46.40 range areas after a retracement from $43.30. Let’s check the Oil Technical Analysis for more levels and insights.
March 5, 2020, | AtoZ Markets – The price of Oil rejected $43.50 area and pushed higher towards $48.50 quite impulsively. Oil failed to sustain further and became volatile. The Bullish bias still on the market, may extend the correction for a while before Bulls continues the Bullish bias in the coming events.
The Oil price rose more than 1% today after the Asian market opened. Oil price recouping some losses from the previous days. After the gains were capped by the unexpected production cut by significant Oil producers. Moreover, Chief Market Strategist at Brokerage CMC Markets, Michael McCarthy said, “Volumes were low, however, reflecting that there is not a lot of confidence in the moves.”
The Organization of the Petroleum Exporting Countries (OPEC), trying to win support from Russia to join them, in the additional Oil output cut. The OPEC has cut five times the output of Oil earlier this year because of the Coronavirus outbreak. Saudi Arabia, who is the most significant contributor, wants to cut extra 1 million barrels to 1.5 million barrels per day on the second quarter and offered to cut 2.1 million BPD in place until the end of years.
Oil Correction Phase may Sustain Further
The price of Oil pushed higher after rejecting from $45 support area and reach at $48.50 but failed to sustain further. The Oil became corrective and volatile and was unable to break above $48.50 area. Bulls may take over the market after Oil correction phase ends.
Image: Oil 1 Hour Chart
According to the 1-hour chart, the price of Oil is now residing inside the range between $48.50 – $46.40 areas. After retracing from $46.30, Oil pushed higher but faces resistance at $48.50 area. If Oil correction phase breaks above $48.50 area, the Bullish pressure may sustain further with the target of $50.50 area.
Moreover, the dynamic level of 20 EMA is residing near the current price, along with the Kijun line and the Tenkan line. It is also squeezing inside the range and quite indecisive. If Bulls can push the market higher, it may act as support for the price. On the other hand, the MACD lines are residing near the 0.00 level and trying to move higher. The MACD histogram volumes are residing below 0.00 level, and it creates a Bullish divergence. It is a good indication that Bulls may take over the market soon.
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Oil Bearish Pressure may Continue but after a Retracement
According to the Daily chart, Oil is now trading at $47 and trying to push the price higher. After being rejected from $43.50 area, Oil pushed higher and was able to have a Daily close above $45. If the price is able to reach the $50.50 area as a retracement, the Bearish pressure may sustain further towards $45 again in the coming days.
Image: Oil Daily Chart
On the other hand, the dynamic level of 20 EMA is residing above the current price, along with the Kijun line and the Tenkan line. It may pull the price higher towards $50.50 area as a Mean Reversion. Moreover, the MACD histogram volumes are showing a Bullish divergence, which is an indication that Bullish pressure may take place in the upcoming events.
To conclude, Oil retracement may lead the price higher at $50.50 area. If oil price is able to reach $50.50 area and rejects, the Bearish pressure may continue further towards $45 area in the coming days.