Oil may Continue Bearish Trend Breaking $50.50 Support area and head towards $50 or lower. As the price remains below $51.50, Bearish Bias may continue. Let’s check Oil Technical Analysis for more levels and insights.
February 7, 2020 | AtoZMarkets.com – Oil recently broke above $51.50 area but could not sustain and push higher. The price broke below $51.50 area and currently residing inside the 100 pips range between $50.50 to $51.50. As per preceding trend in place, the price has higher chance to push lower with target towards $50 or lower again but a break below $50.50 is a must.
Oil did manage to gain certain momentum after bouncing off the $50.50 area but Bulls were rejected at the edge of $51.50. The Bullish pressure gain fuel after Russia backed a recommendation for OPEC to cut supply due to falling demand. As the global market was hit for the Coronavirus issue in China, Oil demand has gone drastically low. As per OPEC+ group’s recommendation, to keep up the price, Russia is said to cut supply by 600,000 barrels per day.
Moreover, China having struggling economy due to Coronavirus issue may also keep the Oil price under pressure. As a result, Oil will have less scope to push higher until there is a reliable solution to the virus.
Oil to reside inside the Range before Breaking $50.50 Support?
Oil did manage to bounce higher from $50.50 area but could not sustain the momentum above $51.50. The price is currently pushing lower again but not quite decisive yet. As per current price action, Oil may continue Bearish trend but a strong break below $50.50 is needed.
image: Oil 4 hour chart
According to 4 hour chart, the price is currently correcting inside the price range of $50.50 to $51.50 area. After the break above $51.50 yesterday, the price formed a 2 Bar pattern and pushed lower impulsively towards $50.50. As the price found support at $50.50 after the impulsive pressure, it again bounced higher. Current ping pong style of ranging between the $50.50 to $51.50 area does indicate the indecisive phase in the market.
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Oil may continue the Bearish Trend further
The dynamic levels are also quite indecisive as well but MACD Histograms are squeezing lower. Moreover, the MACD lines are residing below 0.00 line indicating the Bearish momentum in the play. The Kumo Cloud has widened quite well indicating strong dynamic resistance ready to push the price low as it hits along the way.
As per preceding trend, the price has greater probability to push lower but break and close below $50.50 for Oil is required. A break below $50.50 will act as confirmation for upcoming Bearish move which could lead the price to $50 or lower in the coming days.
On the contrary, a break above $51.50 can lead the price higher for a certain period but it may not sustain. As the Kumo cloud resistance has already widened quite well along the way, the price may find strong resistance and continue lower.
To conclude, Oil residing inside the corrective range between $50.50 to $51.50 area may continue Bearish Trend. A break below $50.50 will confirm further downward move in the process.