- The oil market sentiment took a hit by a fast-spreading coronavirus, as it might lead to a slowdown in the global economic engine led by China’s economic slowdown.
- China is the world’s biggest oil importer, nearly 20.0% of total crude oil imports. The fast-spreading Coronavirus could dent the oil demand.
On Monday, the Brent crude oil fell 4.00% to $54.25 its lowest level in 13-months. The price has been falling five straight weeks, followed by five straight weeks of gains. It has lost the 200WMA and settled below the key moving average.
Since 2017 the price didn’t close below the key moving average for more than two weeks. Whereas now this is the third week, the price is trading below the key moving average.
Since the beginning of the year 2020, Brent has fallen more than 23% and lost more than 15% since the Lunar New Year holidays. This is the biggest straight fall since December 2018.
The momentum is clearly to the downside and could continue if the coronavirus headlines hit the wires again. Last week the World Health Organization declared the Coronavirus an international emergency.
Going forward remains below $60.00 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.
Our last week’s technical rebound forecast got dampened and thus requesting traders to remain sidelines until the upcoming OPEC meeting. The daily RSI located at 18, which is the lowest reading since December 2018.
We request traders to focus on the facts, not on opinions. Facts are backed by evidence, whereas opinions are what a person thinks about something. Based on the RSI indicator oversold condition, we wait for a better buy trade opportunity (meaningful rebound). The first sign of reversal could be on the cards if the price settles above $55.75.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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