Oil pushing Lower continuing Bearish Trend towards $55 with non-volatile Bearish momentum which may extend further. As the price broke below $58 area, it was quite certain that the Bearish trend will prevail. Let’s check Oil Technical Analysis for more levels and insights.
January 23, 2020 | AtoZMarkets.com – Oil has been consolidating at the edge of $58 support area which recently broke with an impulsive Bearish pressure. Despite certain expectation of Oil pushing higher due to Libya unrest, U.S. inventory stock helped to sustain the Bearish momentum.
Oil dipped to 7 week low recently, which marked to be the lowest price of the year. As Oil prices significantly depend on Demand and Supply, U.S. Oil inventory having a surplus managed to lower the Libya and Iraq unrest impact on the prices. Moreover, Resperotory virus spreaded in China may also reduce the demand for Oil. As transportation shut down already in certain areas, the overall demand for Oil may go down. According to JPM Commodity Research, Oil price may decrease by $5 per barrel if the virus effect continues.
Additionally, U.S. having a measure of Oil inventory rising by 1.6 million last week confluenced the current Bearish momentum. As the surplus may remain till the first half of 2020, Oil price may remain below $60 in the coming months.
Oil to reach $50 per barrel?
Oil has been quite impressive with the recent Bearish non-volatile trend. It managed to push below $58 and currently reaching $55 per barrel. After Oil’s consolidation at the edge of $58 area, impulsive Bearish Momentum managed to create a sustainable momentum.
image: Oil 4 Hour Chart
The price had confluence from the dynamic levels as well as the fundamentals while pushing below $58. As the price bounced off the Kumo Cloud dynamic resistance and $58.50 resistance area, the impulsive pressure strengthened.
After the price rejected off the $66.65 area with a daily close, Bears strength increased and sustained till date. Currently there is no indication of Bullish Divergence. The Chikou Span is also downward sloping which does not indicate any Bullish Intervention in the making. If the price manage to sustain the Bearish momentum, it may push lower towards $50 in the coming days.
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Oil can Bounce Back
image: Oil Daily Chart
After an impulsive daily close below $57, Oil is currently pushing lower towards $55. Looking at the history, Oil did react to $55 area for several times. Among the reactions, strongest one was always the Bullish bounce. As the price remained above $51.50 to $55 area, it managed to bounce back quite impulsively. According to Daily Chart, the price is currently slowing down while creating Double Bottom MACD Histogram low indicating an emerging Bullish Divergence. Despite the recent impulsive Beairsh momentum, the price may able to push higher if it manages to remain above $55 by the end of this week.
To conclude, Oil may sustain Bearish trend but there are still chances of Bullish Bounce off the $55 area. If price manages to regain momentum above $55, it can reach $58 again in the coming days.