Oil price gains momentum after the US China Trade Deal, which will enable China to purchase American Energy Products. The Crude Oil inventory declined impulsively but certain gains on upside may occur. Let’s check today’s Oil Technical Analysis for more levels and insights.
January 16, 2020 | AtoZMarkets.com – Oil has been quite volatile with the recent price action as of the U.S. and China Trade Deal. The price did push lower for certain period but managed to recover and remained quite unchanged around $58.00 area.
Crude Oil rose around 0.7% while residing at $58.20 a barrel recently. Despite having strong bullish bias, crude oil may struggle to maintain the upward momentum. Upcoming gains on Oil is depends on China keeping the commitment with U.S. China has committed to buy around $50 billions of oil from U.S. but if they struggle to meet the target then Crude Oil may face certain challenges on the way up.
The volatility in the Oil price is due to slight fall of Oil Inventory recently. Oil Inventory fell by 2.5 million barrels which is 5 times more than expected. Despite the fall in inventory, Crude Oil production has increased 13 million barrels per day which is expected to adjust the deficit.
Oil Technical Analysis – January 16, 2020
The price has been corrective and volatile recently while residing at the edge of $58.00 area. Despite the recent strong bearish momentum for a short period, the price managed to regain its place above $58.00. The price is still struggling to break above the dynamic levels like 20 EMA and Kijun line. Therefore, it is still quite indecisive that the price will push higher today. MACD lines have crossed each other below 0.00 level and showing upward pressure. Additionally, MACD histogram indicating Bullish Divergence is a signal of upward pressure in the making.
image: Oil 4 Hour Chart
As of the earlier price action, the impulsive bearish pressure rejecting off the $65.00 area did slow down after crossing the $60.00 support. While crossing the $60.00 area, the slowdown of bearish momentum formed Bullish Divergence which recently confluenced with MACD line crossover. Despite the U.S. China trade deal, certain gains on Oil may remain temporarily. As the price already managed to reject off the $58.00 area, it is expected to push higher towards $60.00 in the coming days.
Oil price gains Momentum after US China Trade Deal as per Daily chart
image: Oil Daily Chart
According to Daily chart, the price may push higher reverting back to 20 EMA dynamic resistance. As a result of earlier price action, price residing above Kumo Cloud support and daily Bearish Rejection candle indicates bullish pressure is in process. Though Chikou Span is at the edge of price line and have possibility to bounce off it higher. The bearish bias is still intact but certain retracement towards $60.00 area is expected before any bearish intervention is seen.
To Conclude, Oil is expected to push higher towards $60.00 as a form of retracement while the long-term bias is still Bearish.