Crude Oil Prices Trading Around Long-term Trend Support
Crude Oil Highlights:
- WTI oil is trading at the trend-line off the 2016 low
- Brent oil is below the similar trend-line but at a solid slope
WTI oil is trading at the trend-line off the 2016 low
The price of oil has been slammed on the coronavirus, and after already being in a vulnerable position following the de-escalation of Iran tensions. Last week, WTI came very near touching the 2016 trend-line on a daily basis, but showed very limited buying interest.
The failure so far to gain any kind of a bid despite heavily oversold conditions doesn’t make yet for a good backdrop for a rally. That could change upon testing of long-term trend support, but if it doesn’t then the risk becomes skewed towards seeing a probing of the December 2018 low near 42.
If soon we see a strong reversal back to the upside, a counter-trend rebound at the least may be in the works. Those looking to play the rebound may have the upper hand at that juncture. From the short-side, it’s a tough spot at the moment for fresh positions with risk/reward unfavorably skewed.
WTI Crude Oil Daily Chart (2016 trend-line)
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Brent oil is below the similar trend-line but at a solid slope
During the precipitous fall over the past three weeks, the Brent contract broke the same 2016 trend-line that the WTI contract is currently trying to hold onto. This has Brent testing a slope that passes under lows starting from August 2016.
Little response so far suggests it could continue its decline. If this is the case it won’t take much more of a drop to reach the December 2018 low only 4 cents beneath the $50 level. Should we see the 2018 depths tested it could finally lead to a meaningful bounce. For now, longs look in need of something to draw more buying interest while shorts don’t hold good risk/reward with support right at the feet of Brent oil.
Brent Crude Oil Daily Chart (at 2016 slope)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.