Oil price dropped after rejecting a $27.50 event area today during the Asian session. Oil is facing bearish pressure below $27.50, can WTI continue its bullish trend and reach $36 area? What are the charts and technical indicators are saying? Read more to find further insights into today’s WTI Technical Analysis.
May 6, 2020, | AtoZ Markets – Oil is currently trading around $26.15 area while pushing lower impulsively. After an extended period of bullish momentum, WTI facing strong selling pressure and already had a bearish intraday close below $27.50 area. As per the current scenario, WTI bulls may continue to recover higher, but we may see a deeper retracement before sustaining the bullish trend in the coming days.
Investors are focused on oversupply risk after the U.S. crude inventories up more than hoped amid the Coronavirus pandemic. Moreover, U.S. West Texas Intermediate crude futures down by 2.1% to $24.05 per barrel. On the other hand, Brent crude up by 13.9% by continuing the last six days bullish run. Besides, according to data from the American Petroleum Institute, U.S. crude inventories rose 8.4 million barrels last week. It is more than expected.
Furthermore, Lachlan Shaw, National Australia Bank, Head of Commodity Strategy, said, “We’re talking about normalisation of supply and demand, but we’ve got a long way to go. There are a lot of supply cuts that have come through. That, combined with some early signs of demand lifting has meant the rate of inventory build is slowing.” He also added, “When prices start to hold on to those gains, there’ll be a point where producers start to reverse those good shut-ins.”
Oil Facing Bearish Intervention May Push Price Towards Mean?
WTI is currently residing near $26.15 area and trying to push lower. Moreover, after bouncing from $10 area, Oil bulls has become so impulsive and non-volatile and took the price at April’s high.
Image: Oil 4 Hour Chart
According to the 4-hour chart, WTI is currently residing around $26.15 area and had a bearish 4-hour close below $27.50. Currently, Oil is facing bearish pressure, which may lead to further price downside. As per the current price action, Bears may take retracement and push the price down towards the next support level $20 area in the days ahead.
Furthermore, the dynamic level of 20 EMA is currently residing below the price, which may pull the price as Mean Reversion. Besides, the Stochastic Oscillator lines are residing above overbought level 80 from an extended period. The lines had a bearish intersection, which is a good sign of further bearish pressure.
WTI Bullish Trend May Continue After Retracement
According to the daily chart, WTI is currently trading around $26.25 area and pushing lower. So, if the price can have a daily bearish close below $27.50 area, the bears may push the price down towards $20. In addition, if the price bounces from $20 area with a daily close, the bullish trend may continue to recover higher towards $36 in the coming days.
Image: Oil Daily Chart
Moreover, the dynamic level 0f 20 EMA is currently residing near $20 level, which may pull the price down back to the Mean. Besides, the MACD lines are residing below 0.00 level from an extended period, which indicates bears are regaining the momentum in the process.
To conclude, Oil is currently facing strong bearish pressure despite the Bullish bias in place. We may see WTI retracing down at least towards $20 area before price continue the bullish run in the coming days.