The Decline in Oil Picks Up Pace, As Smaller MAs Turn Into Resistance
Crude Oil turned bearish this year, after making a decent climb in December, as OPEC+ decided to cut production by 50k barrels/day. Crude Oil jumped higher from below $50 and tensions between US and Iran helped push it higher during the first week of this year.
But, tensions abated and coronavirus broke out in January, which hurt the sentiment for risk assets such as crude Oil. Although, earlier this month, the sentiment improved in financial markets, as coronavirus was being contained withing China and we saw a retrace higher to $54.40s in WTI crude, with OPEC looking to cut production again, this time by 600k barrels/day.
But, Russia is not sure it wants to cut production further and coronavirus is spreading in Europe as well now, so the sentiment has deteriorated once again. WTI crude has turned bearish again and now moving averages have turned into resistance. it was the 50 SMA (yellow) to do that at first, while today the 20 SMA (Grey) has turned into resistance.
We saw a retrace higher today, but the 20 SMA stopped it and reversed it down, so the selling pressure is increasing, with smaller MAs turning into resistance now. So, as long as coronavirus keeps spreading, crude Oil will be bearish and we will be looking to sell pullbacks higher.
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