US oil is in recovery mode in early Friday and returned above $49.00 handle after suffering heavy losses the day before. Oil price fell sharply on Thursday, losing 5% for the day after OPEC announced agreement for nine-month extension of production cut.
OPEC decision disappointed markets that were expecting stronger action, prompting traders out of long positions that triggered sharp sell-off.
Oil price registered the biggest one-day fall since 08 Mar on Thursday that turned near-term focus lower after daily close below a cluster of supports at $49.76/$49.44, formed by 10/200 and 55SMA’s, as well as $48.83 (Fibo 38.2% of $43.74/$51.98 rally).
Daily 20SMA at $48.47 was cracked on Friday’s extension to $48.24 low, but is still acting as valid support which may hold for corrective rally on strongly oversold 4-hr studies.
Near-term action is biased lower on fresh bearish sentiment and may extend losses towards $47.86 (daily Kijun-sen / 50% retracement) after correction which should be capped under psychological $50.00 barrier, reinforced by daily Tenkan-sen.
Res: 49.23, 49.67, 50.00, 50.55
Sup: 48.83, 48.24, 47.86, 47.35
