WTI oil fell around 4.5% in Asia on Monday and hit two-week low in extension of pullback after bulls stalled at $40 resistance.
Fresh record number of cases of coronavirus in China and the US raised concerns about global demand recovery and soured the sentiment, increasing pressure on oil.
On the other side, China’s industrial production rose for the second month, although below expectations but pointing to recovery that may partially offset negative impact. OPEC-led monitoring panel will meet on Thursday to see whether member countries have delivered their share of the output reductions, but will not make any decision. The first weekly close in red after six straight weeks of rally was initial negative signal which gets support from weekly stochastic emerging from overbought territory. On daily chart, fresh weakness broke through 20DMA ($35.50) and pressuring pivotal support at $33.94, marked by 100DMA.
Break here would risk extension towards next pivotal support at $32.41 (Fibo 23.6% of $6.52/$40.41/30DMA), loss of which would unmask psychological $30 support. Momentum on daily chart is heading south and approaching the border of negative territory and 5/10/20DMA’s turn to bearish setup, adding to negative signals. Focus is on the action near 100DMA, as break would trigger further weakness but rejection here may question bears.
Broken 10DMA ($37.30) marks the upper pivot and close above is needed to neutralize downside threats.
Res: 35.50, 36.03, 37.30, 39.13
Sup: 33.94, 32.41, 31.12, 30.00
