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Oil corrected lower then stuck in a sideways move. Will bears lead the price action or will bulls come back?
Oil Price Technical Analysis
·
Oil Price Corrected lower
·
Negative outlook while
below $39.60 for Brent and $36.32
for WTI
Crude Oil Price Edged Lower
In late August, an upward trend led Brent oil to a six-month
high at $46.51 than retreated after as bulls seemed to cut back. Last week, the
price retreated further and closed in the red with a 6.2% loss, while the US
oil closed with a 3.7% loss.
This week, the Relative strength index (RSI) has risen from
30 to 44 highlighting that bears were losing momentum.
Brent Oil Daily Price Chart (July 3- September 16, 2020)
Last week, the Brent oil failed on multiple occasions to move
to the lower trading zone, reflecting the bear’s hesitation to press even
lower. As a result, the price traded in a sideways move and pointed higher
eyeing a test of the high end of the current $39.60 - $42.50 trading zone.
A daily close above the high end of the zone at $42.50 may
send the price towards the weekly resistance at $45.15 (July 2016 low).
On the flip side, a failure in closing above the high end of
the zone could reverse the price’s direction to re-test the low end of the zone
at $39.60. A further close below that level could send the price even lower
towards the monthly support at $37.00 (a psychological level).
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US Oil
Daily Price Chart (June 3- September 16, 2020)
Last week, the US crude oil rebounded from the low end of
the current $36.32 - $42.23. Consequently, the price pointed higher hinting to
test the high end of the zone.
A daily close above the high end of the zone at $42.23 may
encourage bulls to extend the rally towards the monthly resistance level at
$45.38 (August 2017 Low).
On the other hand, a failure in closing above the high end
could reverse the price direction towards the low end of the zone at $36.32. A
further close below that level could mean more bearishness towards $34.27.
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