OIL WEEKLY ANALYSIS – SHORT SWING FOR THE MARKET BULLS

OIL
WEEKLY ANALYSIS – SHORT SWING FOR THE MARKET BULLS

The new month isn’t exactly off a great start
so far for risk trades. After the historic April 20th on the oil price for the
first time closing at $0.01 per barrel, price action has been able to recover
some grounds, as it couldn’t go deeper in the charts, of course, price action
register a recover of  244K% as the new
high on May 6th touching $27.95 per barrel.

The market remains under bearish pressure as
production cuts won’t ease or improve the impact on the demand sector as long
as the trending COVID-19 “plandemic” is still capturing the
spotlights, as quarantine, lockdowns and social distance policies remain, the
most prominent world economies contraction is unavoidable. In the following
weeks, expect economic releases to show worse conditions in the global economy,
representing the height of downturn for most majors economies, no assuming much
good news during this time, let us move on into the technical charts for the
oil market.

Reading the charts; after seven days’ rally,
the price action had reached the previous strong resistance level in confluence
with Fibonacci level 0.5 stopping the rally as a clear technical correction.
Price action has formed a triple top in this level; with stochastic in an
overbought area, we could expect a downturn correction before the market can
recover some strength and break the $27 handle. With a MACD in a bullish bias
and the 200SMA still slopping down and overextended, we should consider
entering the market only with additional confirmations from the technical side
as the market remains under intense pressure from a global glut.

With 27 million bpd removed from the market in
April and the COVID-19 cases report rising, oil demand remains jeopardized.
However, as it is widely known, the market is always benevolent to those smart
investors and traders who take patience, usually in a sit-and-wait mode, before
placing position. So, let’s keep smart and sharp, as is expected in the
short-term horizon, a solid hurdle around the $28 handle. Let us enjoy and
recharge batteries in this weekend ahead and hopefully see you all next Friday.