USOil, H4
Oil prices opened lower after Trump talked of tapping into the Strategic Petroleum Reserve. Top officials from the EU and China met on trade today, with both talking of the need for WTO reform and Beijing exploring the possibility of increasing access to Chinese markets and lowering tariffs (with the EU). Concerns about deepening Sino-US trade protectionism remain strong, while stock markets in China, across Asia and Europe have posted moderate losses. ECB’s Weidmann reportedly said that the risks to the German economic outlook have been rising
WTI futures are down 1.8% at $68.72, having logged a 3-week low at $68.58, earlier. This comes with Libyan ports reopening crude exports and with Trump talking of tapping into the Strategic Petroleum Reserve. There are also expectations for OPEC, and Russia, to lift supply to offset recent unplanned supply outages.
USOil is trading for the 3rd consecutive day within the lower Bollinger Bands area, while it has returned nearly 50% of the gains seen during the 2nd half of June. The 50% retracement level coincides with the 50-day MA, at $69.35, rendering this area to be a strong barrier for the asset.
Meanwhile, the formation of Tweezer Top in the 4-hour chart on Friday, suggested that further weakness is to follow, with possible corrective turns in lower time-frames. Indeed, USOil has continued moving southwards since Friday, today breaking below the 200-period EMA and the latest swing low at $69.83.
Downside pull reveals as well from the negative MACD and RSI stable at 30 since morning.
A break and closure of the last 4-hour candle below the recent low and strong Support level at $69.35, suggests that the sellers are gaining ground and it is likely to boost the price closer to the next Support level (61.8% Fib. level) at $67.90.
To the upside, if the price rebounds from the 50% Fib. level and transcends the 20-day MA, it could face an immediate Resistance at $71.65 – $71.95. If USOil manages to break above this area, this could imply that the energy contract will return to July’s highs.
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Andria Pichidi
Market Analyst
HotForex
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