March 10, 2020, | AtoZ Markets - The price of Oil dropped record low after breaking below $42 support area. Oil started the week with a big Bearish gap, which took the market lower towards $27.50 area. The Oil found support at $27.50 area with a daily close, may now retrace higher to fill up the gap.
Analysts are expecting a little chance of recovery from the most significant drop in the Oil market, while Oil bounces around 6% today. Oil price dropped because Saudi Arabia and Russia launched a price war. The United States further output cut may gain some momentum for Oil. Still, this gain could be short term as Oil demand continues hitting by the economic impact of the Coronavirus outbreak.
On the other hand, U.S. West Texas International (WTI) crude gained $1.87, or 6%, to $33.00 a barrel, while Brent crude futures rose $2.36, or 6.9%, to $36.72 a barrel. Both markets dropped 25% on Monday to their lowest since February 2016.
Oil Found Support and May Recover Towards $42 Area
Oil is now trading at $33.20 and trying to push higher. After Monday open, Oil dropped record low towards $27.50 area quite impulsively with a gap. As per Mean reversion, Oil may now retrace higher, if it can break above $35 area.
Image: Oil 4 Hour Chart
According to the 4-hour chart, Oil is currently residing near $33.20 area. The price of Oil started trading at $30 today. After bouncing from the $27.50 key support area, the Bulls are continuously trying to push the price higher. If Bulls remain above $27.50 area and push higher above $35, the Bullish pressure may sustain further with the target of $42 resistance area.
Moreover, the dynamic level of 20 EMA is residing above the current price, along with the Kijun line and the Tenkan line. The dynamic level may pull the price higher as Mean Reversion. The Kijun line and the Tenkan line may work as confluence of the dynamic levels of 20 EMA as well as certain Resistance along the way. On the other hand, the MACD line Bullish cross over is in the making which may support the upcoming upward move.
Read More - PBoC Invest $4.7 Million into Blockchain Trade Platform
Bearish Trend may Sustain Further after Certain Retracement
According to the Daily Chart, The price of Oil is currently residing near $33.20 area and pushing higher. The price was able to have a daily close above $27.30, and Oil found substantial support there. If the price can break above $35 area, which is the last daily candle high, the Bullish pressure may sustain higher towards $42 resistance area.
Image: Oil Daily Chart
To conclude, Oil may push higher towards $42 area as it remains above $27.50 area with a daily close. If Oil finds resistance at $42 with a daily close, the bearish trend may continue towards $27.50 area again in the coming days.