WTI: 100-hour MA is capping upside on recession fears

  • Oil is currently probing the 100-hour MA resistance amid US recession fears. 
  • With the futures on the S&P 500 pointing to risk reset, oil prices could rise above the MA hurdle. 

WTI oil's bounce from the seven-day low of $58.20 hit yesterday is struggling to break above the 100-hour MA, currently at $59.35. 

The black gold is struggling to beat the MA hurdle, possibly due to heightened recession fears. On Friday, a section of the treasury yield curve inverted - the spread between the US 10-year and two-year Treasury yields turned negative for the first time since 2007 - triggering fears of recession. Further, the German 10- year bond yield turned negative for the first time since 2016. 

That said, the futures on the S&P 500 are up 0.24 percent at press time, meaning a risk reset could be in the offing. Oil, therefore, may find acceptance above the 100-hour MA hurdle. 

Moreover, risk reset would shift the focus back to the ongoing supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela. 

That said, the immediate bias is bearish, as per technical studies. The black gold fell 1.67 percent on Friday, confirming a bearish doji reversal. Further, on the 4-hour chart, a head-and-shoulders would be formed if prices retreat from the current level of $59.24. 

Technical Levels

    1. R3 60.76
    2. R2 60.09
    3. R1 59.6
  1. PP 58.93
    1. S1 58.44
    2. S2 57.77
    3. S3 57.28


 

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