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Crude Oil Worth Rebound Might Stall as Recession Fears Linger

CRUDE OIL PRICE ACTION REMAINS WEAK ON ELEVATED RECESSION RISK

The value of crude oil is modestly greater to this point throughout Tuesday’s buying and selling session because the commodity continues to stage an try at recovering from final week’s selloff. I famous in my crude oil value weekly technical forecast printed over the weekend that bearish headwinds would doubtless persist as US-China commerce struggle dangers linger, which nonetheless stands regardless of yesterday’s reported de-escalation. The retracement greater in crude oil could quickly stall, nonetheless, as recession fears rattle sentiment owing to the deepening yield curve inversion alongside the 2-year and 10-year maturities.

CRUDE OIL PRICE CHART: DAILY TIME FRAME (DECEMBER 19, 2018 TO AUGUST 27, 2019)

Crude oil price chart technical analysis

Chart created by @RichDvorakFX with TradingView

Crude oil costs proceed to gravitate round technical confluence close to the 54.50 value degree which occurs to be the mid-point of the commodity’s bullish leg from December to late April. Draw back bias over the near-term stays intact as long as crude oil costs wrestle to eclipse this degree of technical resistance. If this zone may be topped, nonetheless, crude oil costs could push greater to check the bearish trendline prolonged from the swing highs printed on July 15 and August 21

But, the damaging sloping 200-day easy shifting common doubtless stands to maintain upward value motion at bay as effectively. Moreover, the extra delicate 50-day easy shifting common dangers turning again under the 200-day easy shifting common which stands to set off bearish value motion owing to the opportunity of a looming “death-cross.” Crude oil’s RSI trending decrease and failing to reclaim a studying above 50 factors to the commodity’s waning bullish prospects. That mentioned, technical confluence across the 52.50 space might function a possible draw back goal the place crude oil costs could discover help from the 61.eight% Fib and bullish trendline.

CRUDE OIL PRICE CHART: Four-HOUR TIME FRAME (JULY 30, 2019 TO AUGUST 27, 2019)

Crude oil price chart technical analysis

Chart created by @RichDvorakFX with TradingView

Having a look on the value of crude oil from a more in-depth perspective underscores the uneven buying and selling vary recorded to this point this month. Fibonacci retracement ranges highlighted on the chart above reveal potential areas of confluence as crude oil value motion progresses with the commodity drifting decrease alongside its short-term bearish trendline shaped since August 21. Above this trendline, crude oil bulls might look to focus on the 55.00 space the place costs have beforehand consolidated.

That mentioned, bearishness may very well be reiterated if crude oil costs sink under help posed by the 38.2% Fib and uptrend line drawn from its intraday lows recorded on August 7 and August 25. If promoting strain accelerates and pushes the commodity under confluent help across the 23.6% Fibonacci retracement degree, crude oil costs might probably retest the month-to-date lows.

OVX – CRUDE OIL VOLATILITY INDEX PRICE CHART: DAILY TIME FRAME (JANUARY 30, 2019 TO AUGUST 27, 2019)

oil price and crude oil volatility index chart

Chart created by @RichDvorakFX with TradingView

Crude oil costs, like that of many danger property, have a tendency to carry an inverse relationship with volatility. Crude oil volatility – measured by way of OVX, Cboe’s 30-day implied volatility of crude oil costs – has begun drifting decrease since final week’s spike. As such, this might counsel that downward strain on crude oil costs might quickly fade. Then once more, the correlation between spot crude and oil volatility is popping much less damaging and signifies that the historic relationship could maintain much less credence going ahead.

— Written by Wealthy Dvorak, Junior Analyst for DailyFX.com

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