On the daily chart below, we can see that the gap that was caused by the surprise OPEC+ production cut was filled yesterday as the price of oil kept falling hard since the rejection from the top of the range at $83.
The market is increasingly bearish on the black gold as the global economy is expected to go into recession this year and thus the demand for oil is expected to fall.
US economic data lately has also disappointed as jobless claims keep increasing week after week and the retail sales report missed expectations across the board. The market is now again at the bottom of the range, and it will be interesting to see what happens next.
On the 4 hour chart below, we can see that as the price rallied towards the top of the range, it struggled to break through, and eventually started to fall. The break below the trendline and the cross to the downside of the moving averages gave the sellers more conviction to push to the downside. Moreover, the break below the swing low level switched the short-term trend to the downside and more sellers piled in targeting the bottom of the range.
We had a strong sell off since Tuesday. This was caused most likely by the First Republic Bank earnings report where it showed that deposits tumbled by 40% and it reignited fears around the banking sector. The market started to look forward to the credit tightening and the recession again and the price of oil just melted.
On the 1 hour chart below, we can see that it’s a sellers’ market for now so the short opportunities are more likely to work. If we get a bounce from this bottom of the range, the sellers are likely to lean on the minor trendline or even better on the previous swing low that has confluence with the 50% Fibonacci retracement level and a major trendline above.
The buyers will want to wait for the price to break above that strong resistance area before getting the conviction to target the top of the range again. Today we have the US Jobless Claims and it's likely that a big miss would bring more selling while a beat should give a rally.
