Oil bounces on fresh optimism but needs to clear many obstacles to generate stronger bullish signal
WTI oil price bounced after triple-attack at critical $20 support failed to break lower and extended gains above $22 on Thursday as the action is holding in green for the second day.
Fresh optimism among traders comes from President Trump’s attempts to assist Russia and Saudi Arabia to reach deal and end price war.
Trump also talked with US oil executives in attempts to find the way to help oil industry, strongly hit by slumping energy demand on coronavirus pandemic.
The third factor that boosts oil prices is China’s plan to start buying oil for its emergency reserves, as world’s biggest oil importer is taking advantage of sharp fall in oil prices to top up its reserves at low prices.
Initial signs of reversal on daily chart require break and close above falling 10DMA ($22.47) which is currently under pressure, to signal recovery extension towards next pivotal barriers at $26.64 (falling 20DMA) and $30 (psychological).
Overall picture is still firmly bearish and requires caution, especially if recovery attempts fail to clear 10DMA pivot.
Res: 22.47; 23.40; 24.63; 25.19
Sup: 21.09; 20.74; 19.90; 19.40