Oil price collapses on rising fears of trade war impact and increased output
WTI oil fell sharply on Tuesday (the contract was down 3.5% until early US trading), as rising fears over negative impact of trade war and higher OPEC production, increase pressure on oil price.
The oil holds firmly in red for the third straight day and accelerates lower after Monday’s action consolidated within narrow range, but remained biased lower.
Daily techs returned to full bearish setup and boost fresh weakness which cracked key Fibo support at $53.15 (61.8% of $50.53/$57.38) and pressures another pivotal point at $52.95 (26 Aug trough).
Firm break here is needed to confirm double-top ($57.11/$56.88) and generate fresh bearish signal, however, bears may fail on the first attempt and hold for consolidation, as supports produce strong headwinds for bears.
Daily momentum turns sideways and adds to consolidation signals.
Traders will look for fresh news about US/China trade conflict and focus on releases of US crude inventories (due on Wed/Thu) for fresh signals.
Corrective upticks are expected to provide better selling opportunities while the price remains below a cluster of daily MA’s (20/10/30) and $54.84/$55.22 zone.
Res: 53.70; 54.52; 54.84; 55.22
Sup: 52.95; 52.35; 51.95; 51.71