Oil price dips on easing concerns about Middle East supply

WTI oil edged lower in early Monday, following calmer tones regarding possible end of Israeli strikes on southern Gaza, which eased fears about supply disruptions from the Middle East.

Fresh easing started to develop a reversal pattern on daily chart after the recent four-day recovery rally was capped by 200DMA / daily cloud top ($77.45) and Friday’s Doji candle with longer upper shadow signaled indecision and rising downside pressure.

Overbought stochastic and south-heading 14-d momentum (although still in the positive territory) contribute to signals, but more work to the downside is required to verify signal.

Fresh bears pressure initial support at $75.88 (Fibo 23.6% of $71.40/$77.26 upleg / Friday’s low), with break here to weaken near-term structure for attack at lower pivot at $75.00 zone (Fibo 38.2% / converged 10/20DMA’s).

Falling 100DMA ($77.93) is approaching 200DMA and about to form a bear-cross, which would add to downside risk.

Alternative scenario requires lift through 200 and 100DMA’s to ease bearish pressure, while break above $79.27 (former high of Jan 29) and psychological $80 barrier to signal bullish continuation.

Res: 77.45; 77.93; 78.13; 79.27
Sup: 75.88; 75.00; 74.33; 73.64