WTI oil cracked strong support at $50 (Fibo 38.2% of $45.57/$52.84 rally / weekly cloud top / psychological support) on Wednesday, in extension of pullback from fresh recovery high at $52.84 (the highest since mid-Apr).
Oil price stands in red for the fifth straight day, in extended correction that undermined broader bulls.
Markets are concerned that strong uptrend which lasted for the most of Q3 may not extend further, which resulted in profit-taking and dragged the price lower.
Oil prices were well supported on strong signs of market rebalancing on rising demand which offset the impact from global oversupply that kept oil prices depressed for longer period of time.
Also, output reduction from OPEC and top oil producers outside the cartel, gave results and boosted the price.
However, rising oil production in the US, which is not participating in oil production cut limited oil’s recovery rally.
Price is now at the breakpoint and sustained break below $50 pivot would spark fresh extension of pullback from $52.84 peak towards initial target at $49.50 (200SMA) and may accelerate towards $49.20 (Fibo 50%) and $48.85 (rising 55SMA).
However, bears may take a breather above $50 pivot as slow stochastic is deeply oversold on daily chart.
Limited upside action is expected, with initial barrier at $50.71 (Tuesday’s high) and extended upticks to be capped by south-turning 10SMA (currently at $51.16).
Res: 50.22, 50.71, 51.16, 51.38
Sup: 49.90, 49.50, 49.20, 48.85
