WTI Crude Oil Dropped Below $38.00 - Symmetric Triangle Pattern in Play

WTI Crude Oil Dropped Below $38.00 – Symmetric Triangle Pattern in Play

Posted Thursday, June 11, 2020 by
Arslan Butt • 2 min read

During Thursday’s Asian trading session, WTI crude oil failed to extend its previous day gains and dropped below $38.00 level from the $40.00 level mainly due to the strong rise in the American crude stockpiles, which eventually fueled concerns about oversupply and contributed to losses. Moreover, the selling bias in crude oil could also be attributed to the fresh ongoing tussle between the United States and China.

The Federal Reserve prediction about a long road to recovery for the US economy also exerted some downside pressure on the oil benchmarks earlier. At this moment, WTI crude oil prices are currently trading at 37.99 and consolidating in the range between 37.91 and 39.05.

At the data front, the EIA inventories for the week ended on June 5 increased past -1.738M forecast to +5.72M barrels. On Tuesday, inventory data from the private reporter, American Petroleum Institute (API), also registered a strong build of 8.42 million barrels against the anticipated drop of 0.483 million barrels.

While talking about Fed, the Fed Chairman Jerome Powell said the coronavirus could cause longer-lasting damage to the economy, and recovery from the pandemic would take years. Additionally, the Fed indicated that it would keep rates near zero, possibly for years to come. According to the Fed forecast, the US economy will fall 6.5% this year, and the unemployment rate will be 9.3%, which eventually pushes investors’ confidence down about the oil demand recovery.

At the US-China front, China’s Global Times recently criticized the US Federal Reserve’s latest monetary policy decision while saying that the US’s massive liquidity stimulus package will boost the US government’s debt to not only its people but also the world. As a result, US Vice President Mike Pence decided to take a firm stand against China on trade, which fueled the risk-off market sentiment and became one of the key factors that kept a lid on any gains in crude oil, at least for now.

WTI Crude Oil Dropped Below $38.00 - Symmetric Triangle Pattern in Play

Daily Support and Resistance

S1 1663.66

S2 1695.94

S3 1715.92

Pivot Point 1728.22

R1 1748.2

R2 1760.5

R3 1792.78

Technically, WTI crude oil is forming a bullish setup as its values hold above 38.16 support level. The 50 EMA is also supporting the buying trend in oil along with an upward trendline, which can be seen in the 4-hour timeframe. On the higher side, the next resistance stays at 39 and 39.40 today, while support stays at 38.05 and 37.30.

Good luck!

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