WTI oil price eased on Monday but staying in directionless mode after spike on Friday on news that OPEC decided to reduce the output stalled and Friday’s action ended in long-legged Doji candle.
Adding to neutral tone was the second straight long-legged weekly Doji, as recovery attempts showed signs of stall after rallies were repeatedly capped by falling 20SMA ($53.24) and daily closes were well below the moving average.
Also, fresh bulls failed to close above broken weekly 200SMA ($52.29), increasing downside risk.
Concerns that 1.2 mln bpd cut won’t be sufficient to stabilize oil market, as oil inventories rose on surge in US supply.
It seems that oil looks for another catalyst which would generate stronger direction signal, after recovery attempts lost steam.
Stronger momentum on daily chart underpins, but overall picture is negative and sees risk of retesting cracked psychological $50 support if 20SMA continues to cap.
Eventual break below $50 pivot would generate strong negative signal which could spark fresh bearish acceleration in extension of larger downtrend from $76.88 (2018 high).
Break and close above 20 SMA would sideline downside risk, but stronger recovery signals could be expected on break above $56.26 (falling 30SMA) and $59.90 (Fibo 38.2% of $76.88/$49.40 fall).
Res: 52.78; 53.24; 54.54; 55.89
Sup: 51.25; 50.59; 50.00; 49.40
