Brent crude oil slide more than 4% overnight, on a sudden spread of covid-19. As a sudden increase of coronavirus infections outside Chinese borders (Iran, Italy, and S.K) unwound earlier confidence, the outbreak might be contained. Last weekend developments provided us with a stark reminder that the covid-19 is currently an unstoppable force.
At close, Brent crude has ended the session below 20MA and left a big gap. By the end of the day, finally, the price of oil received some support after local health officials in China said that four provinces had lowered their virus emergency response measures.
Oil price is now testing the 78.6 fib reaction provided by the rally from $53.20 Feb 10 low to last week high of $59.60. A decisive break below would open up further downside towards the lows recorded at $53.20.
We highlighted in our last week’s report; we still believe there is some more legroom in the coming days in case of an extension of the epidemic.
Below its 200WMA, we may see more downside risk towards $52.50 and $50.00 levels. The corrective wave pattern suggests it might fall to $51.70. It will be interesting to see if we make a move to $50.00 levels.
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