Overview: – By analyzing the daily technical chart we can see that earlier crude oil was trading in the very narrow range of uptrend channel where bulls were leading in the game and they arrived at $65.62 level however after arriving at that level bulls denied to move up further due to which we have seen a shooting star candlestick followed by a big bearish marabuzo candlestick on the daily chart after that we have seen 3 consecutive negative trading session and eventually on the weekly as well as monthly basis crude converted all the gains into losses.
Also, after arriving at $57.35 level bulls managed their self and tried to take the pair at $59.61 level but again bears got the grip once again and took the pair downside with full of energy and at marked a low of $52.13 level.
Fundamental analysis: – At the start of the year, it was all about US-Iranian tensions, and the aftermath of the de-escalation of troubles has continued to weigh on the price in a massive positioning shakeout. We continue to expect follow-through selling in the complex, as trend followers further sap liquidity from the market, selling their length and adding shorts. It marked multi month’s low of $52.13 since October 2019.
Saudi Arabia’s Energy Minister crossed the wires while reiterating the ability of the Organization of the Petroleum Exporting Countries (OPEC) and other ally countries, mostly known as OPEC+, to support oil markets if needed. The current impact on the oil market is currently driven by ‘psychological factors’ and expectations despite the currently limited impact on global demand.
Technical Analysis: – From technical prospective we can see that crude oil has arrived below the uptrend line, bears given us valid breakout of the uptrend line from intermediate point of view and a short term aggressive downtrend line is the recent development on the daily chart. By applying the Fibonacci retracement line from $50.70 to $65.62 level we can see that it is below the golden retracement line i.e. 61.8% so this was the only hope for the bulls so a clear downside breakout of this level also pushing us to have a bearish view now.
On a bigger picture we can see a triple top pattern on the daily chart which is strong reversal pattern and even third top has been formed successfully and we may announce that crude oil is topped out and the 3600 level is the unfinished target for bears. Odds are in favor of bulls and intraday to weekly bias remains bearish on the crude oil as long as $57 level remains intact. Overall crude oil is trading below all the major and minor EMA lines and bears are maintaining it keep the crude oil below the 200 SMA line also which is a strong level lying at $57 and in the last week bears given clean sweep of this level also which is a recent development.
A bearish crossover on the MACD indicator is favoring the bears and RSI is also heading downside near 30 level which suggest us to keep bearish view and some we may see some correction also once RSI enter into oversold territory so we this correction would be as selling opportunity.
What next:- With a contrarian view if bulls able to sustain above $57 level and covered all the losses then we may shift our view from downside to upside however there are very less probability for this outcome. The $52 is the next support level followed by $51 level which is a strong support level whereas $55 is a key resistance level followed by $57 level.
Trade idea:- Investors and traders are advised to sell the crude oil near $53 for the target of $51 and $50 with the tight stop loss of $55 on closing basis.
