Oil Technical Analysis – Oil to Lose Further Momentum?


Here is the Oil Technical Analysis for 14 January, 2020. Oil price declined quite impulsively after rejecting off the $66.50 price area. Further bearish pressure is expected, leading the price lower in the coming days.

January 14, 2020 | AtoZ Markets – Oil is currently under pressure after the assassination of Iranian General Solaimani by the American Government. The price did manage to push higher towards $66.50 per barrel earlier. It could not sustain the bullish momentum as the anticipation of China deal and fear of oversupply impacted the overall bullish rally.

Different stakeholders of Oil are impacting the price in a different way. But the primary role player is expected to be the Demand and Supply of the commodity. There is a certain fear of oversupply in the market, which is driving the bears to push the price lower. The overall corrective phase is expected to play out and may result in absolute bullish pressure along the way. However, it can push the price higher inside the current corrective range between $50.00 to $66.50 area.

Last week, the Crude Oil (WTI) benchmark declined more than 6%. It was the most impulsive decline in comparison to previous 6 months price action. The oversupply fears emerge due to massive oil inventory stock data by the US Government. There is a higher probability of continuing the bearish pressure in the coming days.

Oil Technical Analysis – 14 January, 2020

The price has been ranging between support area of 50.00 to resistance area of 66.50 since May 2019. The price did show certain bullish rally after bouncing off the 51.50 price area on September 2019.  It could not sustain the bullish momentum above 63.65 price area with a daily close.

Recent Bearish pressure off the 63.65 area has been quite impulsive after the strong bullish rejection in the daily chart. The price engulfed around 50% of the recent bullish rally. However, the price may push lower towards 55.00-50 mid-support area before showing any sign of bullish intervention in the process. The dynamic level 20 EMA is currently residing at 60.00 area. It might attract the price after an inevitable downturn to revert back to the mean. It will work as a confluence for the upcoming retracement. Moreover, the price forming no evidence of Divergence in the process does eliminate the fear of certain bullish intervention in the near future.

On the Ichimoku perspective, the Tenkan and Kijun line is currently in the process of bearish crossover. The Chikou Span is at the edge of breaking below the price line. The specific strong evidence is supporting the upcoming bearish momentum. But the Kumo Cloud dynamic support may hold the price at 55.00-50 area and push the price higher again towards 63.65 area. The price remains above 55.00 area with a daily close. The long-term bullish bias is expected to continue with the range play between the boundaries.

Overall, the Oil price may push lower towards 55.00 area before any bullish intervention is observed in the future. The price might lead to a bounce towards 63.65 area again the coming days. A break below 55.00 area with a daily close may deviate the bullish bias.

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