Bulls face strong headwinds from falling daily cloud
WTI oil price eases in early Monday, following strong acceleration on Friday and last week’s 15% advance (the biggest weekly rally since the last week of February).
Traders start to collect profits as daily studies are overbought and Friday’s rally penetrated falling thick daily cloud, which provides strong resistance.
The oil was strongly boosted by the OPEC+ decision last week to cut production by 2 million barrels per day, in already tight market and despite the US strongly opposing such move, as high oil prices ahead of mid-term election in the US, would disappoint voters.
On the other side, persisting worries of China’s economic slowdown that would negatively impact a global demand, warn that the latest acceleration may lose traction
Supportive technical factors for oil were formation of reversal pattern and a bear-trap on weekly chart, though weekly studies are still mixed and lack stronger direction signal.
Overstretched daily indicators and falling cloud weigh on near-term action, with first scenario of a shallow correction finding support at $90/$89.26 (psychological / Fibo 23.6% of $76.25/$93.28) that would keep bulls intact for fresh penetration into daily cloud (cloud base lays at $92.70) and extension towards next pivotal barrier at $94.36 (Fibo 38.2% of $123.65/$76.25).
Caution on break of these levels that would risk drop towards the lower pivot at $86.77 (Fibo 38.2% of $76.25/$93.28).
Res: 92.70; 93.28; 94.36; 95.72
Sup: 91.00; 90.00; 89.26; 88.49