Best analysis

So, as we had expected (see yesterday’s email below) the OPEC decided against trimming it is production quota of 30 million barrels of oil per day and prices have unsurprisingly extended their falls as a result. The Brent contract has so far fallen to a low of $74.35, thereby taking out the key psychological $75.00 level. WTI slipped below the $71.00 handle immediately after the news was announced. Given that much of the news was already priced in, I wouldn’t be surprised to see oil prices stage a short covering rally now, especially as most US investors are on holiday. That said, the potential gains would be limited as the news means the oil market will remain amply supplied for the foreseeable future. Therefore, all else remaining equal, crude prices should be pushed further lower in the weeks and months ahead.

If Brent closes the day below the $75 handle then it would be reasonable to expect further follow-through in selling on Friday. As things stand, the next support seems to be around $73.50, which corresponds with the lower support trend of the bearish channel. Beyond that, the sellers could target the next psychological level of $70 a barrel. But that’s not to say prices will necessarily bottom there. For all I know, Brent could drop to even $50, before staging a significant recovery. It is important to note that what has happened is that there has been a shift in paradigm. So the trend can remain lower longer than most people expect it to. WTI meanwhile could fall its own psychological handle of $70 a barrel over the coming days. Standing on the way to tat target is a 161.8% Fibonacci extension level at just below $70.50. The previous support levels could now turn into resistance. For Brent, that level was $77.60 while for WTI it is $73.30.

Trading Analysis Corner

Trading Analysis Corner

Trading leveraged products such as FX, CFDs and Spread Bets carry a high level of risk which means you could lose your capital and is therefore not suitable for all investors. All of this website’s contents and information provided by Fawad Razaqzada elsewhere, such as on telegram and other social channels, including news, opinions, market analyses, trade ideas, trade signals or other information are solely provided as general market commentary and do not constitute a recommendation or investment advice. Please ensure you fully understand the risks involved by reading our disclaimer, terms and policies.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD stays near 1.0800 after upbeat US data

EUR/USD stays near 1.0800 after upbeat US data

EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.

EUR/USD News

GBP/USD stays in daily range above 1.2600

GBP/USD stays in daily range above 1.2600

GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.

GBP/USD News

Gold pulls away from daily highs, holds above $2,200

Gold pulls away from daily highs, holds above $2,200

Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.

Gold News

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase. 

Read more

Portfolio rebalancing and reflation trades emerge into Q2

Portfolio rebalancing and reflation trades emerge into Q2

Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.

Read more

Majors

Cryptocurrencies

Signatures