Oil markets yesterday have experienced what is considered a technical correction, creating much expectation about a further recovery. However, it would be hard to claim that it is objectively true. Still, the market needs to deal with the Covid-19 and the disintegration of the OPEC+ alliance.
The market remains under sellers pressure, where investor and traders are still weighting the immediate impact in the global economy with the spread in different latitudes of the virus, newly affected countries are considering stronger lockdowns, that definitely will create mayhem in the oil demand.
Today's weekly report will have two charts to explain and easily spot the bearish pressure in the weekly reign and the technical correction in the H4 domain. In W1 (weekly charts) Oil has recorded a 69.20% plunge from its January high reaching levels last seen in Feb 2002, next support level from 1998 at 16.24 could be achieved even with economic stimulus announcements and the end of the price war between the Saudis and Russians. It would take time for the oil market to cope with the intense never seen disruption in the demand before finally correcting.
Now in the H4 domain (4 hours charts), the price experienced a recovery of 38% from its lowest level, never seen before, giving some enthusiasm to the market. Some experts said it was due to Trump's proposal on increasing the national oil reserves supporting the American drillers hammered by the plunge in oil prices. However, personal opinion, this was a more technical correction after reaching a critical demand zone of $20 per barrel; bulls were sitting there expecting to fill up their orders, and clearly, it just happens, pushing the price action back to the daily moving averages. Finding resistance close to 50 Fibonacci level price action is still under a clear bearish bias, where the last line of defense for the bears could be the next Fibonacci level at around 61.8. Now, 50 EMA and 200 MA continue in bright free fall. MACD (not displayed in the chart sorry) showed some bullish divergence that confirmed this encountered correction. The market will continue to check on the Bulls' endurance for this short-term correction.
As a last note, this downturn in prices for the oil producer dependent countries could vanish governments revenues by up to 85%, for instance, Venezuela, Ecuador, Iraq, Nigeria, Angola are at particular risk, opening the door for the international financial institution to step in and take extraordinary measures. Iraq's oil minister had pledged the call for an emergency meeting with the OPEC this week when price tested the $26 handle, with no confirmation on that front yet, let's get into the weekend and see what next week will bring to the market.
The market remains under sellers pressure, where investor and traders are still weighting the immediate impact in the global economy with the spread in different latitudes of the virus, newly affected countries are considering stronger lockdowns, that definitely will create mayhem in the oil demand.
Today's weekly report will have two charts to explain and easily spot the bearish pressure in the weekly reign and the technical correction in the H4 domain. In W1 (weekly charts) Oil has recorded a 69.20% plunge from its January high reaching levels last seen in Feb 2002, next support level from 1998 at 16.24 could be achieved even with economic stimulus announcements and the end of the price war between the Saudis and Russians. It would take time for the oil market to cope with the intense never seen disruption in the demand before finally correcting.
Now in the H4 domain (4 hours charts), the price experienced a recovery of 38% from its lowest level, never seen before, giving some enthusiasm to the market. Some experts said it was due to Trump's proposal on increasing the national oil reserves supporting the American drillers hammered by the plunge in oil prices. However, personal opinion, this was a more technical correction after reaching a critical demand zone of $20 per barrel; bulls were sitting there expecting to fill up their orders, and clearly, it just happens, pushing the price action back to the daily moving averages. Finding resistance close to 50 Fibonacci level price action is still under a clear bearish bias, where the last line of defense for the bears could be the next Fibonacci level at around 61.8. Now, 50 EMA and 200 MA continue in bright free fall. MACD (not displayed in the chart sorry) showed some bullish divergence that confirmed this encountered correction. The market will continue to check on the Bulls' endurance for this short-term correction.
As a last note, this downturn in prices for the oil producer dependent countries could vanish governments revenues by up to 85%, for instance, Venezuela, Ecuador, Iraq, Nigeria, Angola are at particular risk, opening the door for the international financial institution to step in and take extraordinary measures. Iraq's oil minister had pledged the call for an emergency meeting with the OPEC this week when price tested the $26 handle, with no confirmation on that front yet, let's get into the weekend and see what next week will bring to the market.
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FEEL FREE TO CHECK MY SOCIAL NETWORKS FOR MORE MARKET INFORMATION 🇺🇸 🇪🇸
INSTAGRAM:
instagram.com/og.fxtrader
FREE TELEGRAM:
t.me/ogfxtrader
TWITTER
twitter.com/ogfxtrader
FACEBOOK
facebook.com/ogfxtrader
INSTAGRAM:
instagram.com/og.fxtrader
FREE TELEGRAM:
t.me/ogfxtrader
twitter.com/ogfxtrader
facebook.com/ogfxtrader
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.