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  • WTI has fallen around 6% on Tuesday. 
  • There is a decent support level on the daily chart that cannot be overlooked.

WTI daily chart

Once again analyst’s are citing oversupply concerns and another rise in global COVID-19 cases as the reason for the sell-off in oil markets. Add the strong dollar to the mix and the end of the US holiday season and it seems to be the perfect cocktail for the sell-side. 

More importantly, the price is suggesting more downside is to come. Since the break of the 55 Simple Moving Average there has been a strong move lower past USD 40 per barrel to reach a low of USD 36.43 per barrel. The candles had been diminishing in size leading into the sell-off which suggests the bull run was running out of steam. Having said that it the lacklustre price action lasted longer than some had expected.

The indicators are understandably bearish. The Relative Strength Index is extended in the oversold area. The MACD histogram is in the red and the signal lines have also crossed under the mid-level. The main focus will now be if the price can stop at the 38.2% Fibonacci level which confluences with an old resistance zone from April. The level has been used a few times other than that so it could be significant in the future as the price plummets. 

Oil Price Analysis

Additional levels