WTI oil price remains in a steep fall for the fifth consecutive day, losing over 1% and hitting new four-month low in early Tuesday’s trading, after 3.8% drop on Monday (the biggest daily fall since Nov 16).
The sentiment soured on growing concerns about weakening US demand, indicated by weaker than expected data from the US manufacturing sector, as well as signals that OPEC+ may review and gradually ease its voluntary production cut from October, after keeping it unchanged in cartel’s meeting last Sunday.
Technical picture on daily chart is firmly bearish, as the latest bear-leg of larger downtrend from $87.61 (2024 peak, posted on Apr 12) has so far retraced nearly 76.4% of $67.70/$87.61 (Dec 2023 / Apr 2024 rally).
However, reaction to the latest sharp bearish acceleration (oil price was down over 9% in past five days) should be anticipated, as oversold conditions may prompt partial profit-taking.
Bears face solid supports at $72.40 (Fibo 76.4%) and $71.40 (Feb 5 higher low) where increased headwinds could be expected.
Correction is likely to be limited in current circumstances (strong downtrend / negative fundamentals) and likely offer better levels to re-enter the downtrend.
Broken Fibo 61.8% ($75.31) and former range floor ($76.13) offer good resistances which should ideally cap and guard falling 10/20DMA’s ($77.19/$78.02 respectively) violation of which would dent bears and expose upper pivots at $78.75 / $80.60 (200DMA / May 29 lower top).
Res: 74.10; 75.31; 76.13; 77.19.
Sup: 72.40; 71.40; 70.61; 70.00.
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