OIL WEEKLY ANALYSIS – MARKET BULLS SAVED BY TECHNICAL CONFLUENCE

OIL
WEEKLY ANALYSIS – MARKET BULLS SAVED BY TECHNICAL CONFLUENCE

The recovery in the oil market has been driven
mostly by fundamental forces. Bulls took the stairs directly to the 40th floor,
then a lack of support, changes in the market sentiments, inventories building
up, and the potential threat by a second wave hitting the leading economies
have finally paid off.

The OPEC+ meeting has done little for the oil
prices; the extension of the production cuts by another month won’t help much
when the real problem is based on demand. Lockdowns, quarantines, and lack of a
vaccine would drive the sentiment on the market for the time being.

Now in the realm of the charts, the price was
able to register a fresh high last Monday at 40$ handle. However, today Friday
is recording a sell-off of about 11%. Price action was able to find support in
a confluence area, holding prices by an ascending trendline, the exponential
moving average (EMA) in confluence with Fibonacci level 61.8, and the 34.5$
handle. This mentioned area was able to contain the market. However, technical
indicators as MACD has crossed to inform the bearish bias with a sell signal
along with the RSI dropping sharply from the overbought zone where it has been
since last Friday. In case the price action breakthrough the current area, the
market could quickly drop to below 30$ handle.

With the renewed concern about the market
revisiting prices from last March, bears are lining up in high hopes, while
bulls’ only option is to rely on the technicality of the market seeking a clear
break above 40$ to dive in. Enjoy your Friday and weekend ahead. See you all
next week.