On the daily chart below, we can
see that the gap that was caused by the surprise OPEC+ production cut was
filled yesterday as the price of oil kept falling hard since the rejection
from the top of the range at $83.
The market is increasingly
bearish on the black gold as the global economy is expected to go into
recession this year and thus the demand for oil is expected to fall.
US economic data lately has also
disappointed as jobless claims keep increasing week after week and the retail
sales report missed expectations across the board. The market is now again at
the bottom of the range, and it will be interesting to see what happens next.
On the 4 hour chart below, we can
see that as the price rallied towards the top of the range, it struggled to
break through, and eventually started to fall. The break below the trendline and the cross to the downside of
the moving
averages gave the sellers more conviction to push to the downside. Moreover, the
break below the swing low level switched the short-term trend to the downside
and more sellers piled in targeting the bottom of the range.
We had a strong sell off since
Tuesday. This was caused most likely by the First
Republic Bank earnings report where it showed that deposits
tumbled by 40% and it reignited fears around the banking sector. The market
started to look forward to the credit tightening and the recession again and
the price of oil just melted.
On the 1 hour chart below, we can
see that it’s a sellers’ market for now so the short opportunities are
more likely to work. If we get a bounce from this bottom of the range, the
sellers are likely to lean on the minor trendline or even better on the
previous swing low that has confluence with the 50% Fibonacci
retracement level and a major trendline above.
The buyers will want to wait for
the price to break above that strong resistance area before getting the
conviction to target the top of the range again. Today we have the US Jobless Claims and it’s likely that a big miss
would bring more selling while a beat should give a rally.