By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Crude Oil prices are falling on Monday. The most serious bearish attack took place early in the morning during the Asian trading session when WTI broke 20 USD for the first time since 2002. A barrel of Brent is now trading at 23.52 USD.
Four correctional waves couldn’t help Brent fix above 30 USD. Obviously, market players are not sure about the future outlook: starting from April 1st, oil-producing countries, members of the OPEC+, will not be bound by any agreement to limit the daily output, which means that by the middle of April cheap oil from Saudi Arabia may flood the market and make crude oil prices plummet much lower.
In addition to that, even if the capacity utilization rate of the Chinese industry reaches 98%, no one can be sure that the demand for energy commodities will be more or less stable. This is a fundamental factor that drags oil prices down.
In the H4 chart, after breaking 25.25 to the downside, Brent may continue falling to reach 22.00. Later, the market may start another growth to test 25.25 from below and then form a new descending structure towards 21.50. Later, the market may resume trading upwards with the first target at 30.00. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 inside the histogram area, thus indicating further decline on the price chart.
As we can see in the H1 chart, Brent has broken 24.00 downwards; right now, it is still falling with the short-term downside target at 23.23. After reaching this level, the pair may correct towards 25.25, at least, and then resume trading inside the downtrend to reach the target from the H1 chart at 22.00. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving below 50. Later, the line may fall to break 20 and then resume moving upwards, thus indicating a correction on the price chart.
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.