The recent bullish pressure in oil was very impressive after the past fall. The price is moving up by creating higher highs in the intraday chart. However, oil is facing resistance at $21.50 per barrel, which indicates that the price may correct lower before proceeding further upside. Let’s check the Oil Technical Analysis for more levels and insights.
May 04, 2020, | AtoZ Markets – WTI bullish momentum sustained quite well above the $20 price level before facing resistance at $21.50 per barrel. Despite the recent market crash below the $0 level, such gain is an indication of the supply and demand normalization in the global economy.
On May 1, OPEC+ started its latest plan to take about 10 million barrels per day of oil from the market. This move is significant to regain control of the oil supply and to stabilize prices. However, it is not enough given the size of the overall demand destruction. Moreover, OPEC+ may need a tremendous amount of help from U.S. producers.
Oil is Facing Resistance at $21.50 per Barrel
The recent collapse in the WTIUSD was very impressive to attract investors. As a result, the price bounced back from an all-time low recently.
image: Oil 4-hour chart
According to the 4-hour chart, the price managed to move higher with a bullish momentum above $18, creating a new high. Despite the recent bullish gains in the intraday chart, the MACD is showing a Bearish Divergence formation where the price is facing a static resistance at $21.50 levels. As the price is struggling to break above $21.50 levels, it may correct lower in the upcoming trading sessions. Moreover, as the price is higher above the dynamic level of 20 EMA, some correction is pending as a mean reversion.
Therefore, as per the current intraday chart, the price may retrace lower towards the dynamic level of 20 EMA and static level of $18.50. However, as the price remains above $10, the bullish bias may increase in the coming days.
Oil May Move Higher After a Correction
Oil has gained bullish momentum and bounced above the $10 recently. Though the price is facing an intraday resistance at $21.50, the bearish momentum is likely to activate.
image: Oil Daily Chart
According to the daily chart, the price is residing above the dynamic level of 20 EMA. However, the bullish price action was not surprising above the dynamic level; therefore, it may correct lower. As per the price action in the daily timeframe, the price has a higher possibility to correct towards the dynamic level of 20 EMA.
At this point, Bulls showed weakness at $21.50 level; therefore, a correction towards the dynamic level is pending before moving further high. However, if bears manage to have a daily close below the $18.00, it may drop sharply towards the $10.00 level.
To Conclude, WTI is facing resistance at $21.50 on the intraday chart. At this point, a bearish rejection after some downside correction may continue the price higher. On the other hand, a daily close below the dynamic level and $18.00 level may lead to further bearish pressure.