Oil witnessed overnight selloff, the Brent and NYMEX light sweet crude markers fall to $63.28/b and $60.00/b, a correction of 6.94% and 7.12%, respectively.
Why did oi prices rally in the first place?
A combination or investors feeling global market recovery, risk-on mode seen a cross assets, OPEC Confirmation to keep production cut, and Investors fear of missing out on the long trade. As well as Saudi Arabia South area of Gazan was hit with two missiles from southern neighbour Yemen.
The above mentioned factors were a massive fuel for Investors to participate in the excessively strong up move in oil prices.
Taking in consideration, the global recovery will be in all fields, Transportation, Manufacturing, services, etc… all these fields will need Fuel, this demand forecast was with OPEC Producing countries need to make up for the loss on profit they has as a result of the virus shut downs and lock downs.
Why did the market sell off?
After the Feds chairman’s speech, market moved to risk-on mode, unfortunately it didn’t survive the profit taking turn, and market was sold off, and risk-off moves in cross-asset correlations begun.
The market was priced in for positive Fed’s speech, the speech was a confirmation of very supportive policy, Investors started to take profit after as the assets reached new ATH, and this is a very common practice with investors.
Divergence on RSI was noticed between Feb 2nd and March 9th, while prices were pushing up, the RSI indicator reading was lower. Comparing Feb 2nd price of 58.50 $/br and March 9th of 67.90 $/br , We can notice RSI was 86.50 and 78.11 respectively. This was an indication of trend weakening and possible correction is coming.
What is next in oil Journey?
RSI reading was in over-bought territory above 75 prior to March 18 selloff, the indicator reading dropped below 25 an over-sold territory, and had fast-followed recovery.
USOIL prices are still under pressure, and next support is 57, If risk-on mode will start and oil prices to rise, the next resistance is 63.75
USoi is flirting with the 23.6% Fibonacci level , swing measured between Oct 30th 2020 and March 3rd 2021, If the the 59.66 Price which is a previous two times support will not hold, US oil will be up to further decline and could test the next 38.2 level which is around 54.45
On the upper side, if Bulls return in control, we could see re-test of ATH of the year around 67.90
The Med term view on economic recovery suggest Bulls will not give up easily, and we can see them back soon taking control.
Why did oi prices rally in the first place?
A combination or investors feeling global market recovery, risk-on mode seen a cross assets, OPEC Confirmation to keep production cut, and Investors fear of missing out on the long trade. As well as Saudi Arabia South area of Gazan was hit with two missiles from southern neighbour Yemen.
The above mentioned factors were a massive fuel for Investors to participate in the excessively strong up move in oil prices.
Taking in consideration, the global recovery will be in all fields, Transportation, Manufacturing, services, etc… all these fields will need Fuel, this demand forecast was with OPEC Producing countries need to make up for the loss on profit they has as a result of the virus shut downs and lock downs.
Why did the market sell off?
After the Feds chairman’s speech, market moved to risk-on mode, unfortunately it didn’t survive the profit taking turn, and market was sold off, and risk-off moves in cross-asset correlations begun.
The market was priced in for positive Fed’s speech, the speech was a confirmation of very supportive policy, Investors started to take profit after as the assets reached new ATH, and this is a very common practice with investors.
Divergence on RSI was noticed between Feb 2nd and March 9th, while prices were pushing up, the RSI indicator reading was lower. Comparing Feb 2nd price of 58.50 $/br and March 9th of 67.90 $/br , We can notice RSI was 86.50 and 78.11 respectively. This was an indication of trend weakening and possible correction is coming.
What is next in oil Journey?
RSI reading was in over-bought territory above 75 prior to March 18 selloff, the indicator reading dropped below 25 an over-sold territory, and had fast-followed recovery.
USOIL prices are still under pressure, and next support is 57, If risk-on mode will start and oil prices to rise, the next resistance is 63.75
USoi is flirting with the 23.6% Fibonacci level , swing measured between Oct 30th 2020 and March 3rd 2021, If the the 59.66 Price which is a previous two times support will not hold, US oil will be up to further decline and could test the next 38.2 level which is around 54.45
On the upper side, if Bulls return in control, we could see re-test of ATH of the year around 67.90
The Med term view on economic recovery suggest Bulls will not give up easily, and we can see them back soon taking control.
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