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  • Oil prices dumped on Monday below key short term trend line support and a former resistance level.
  • WTI is currently trading at $55.45 between a range of $55.11 the low and from $57.51 the high.
  • Bulls stepping in above trendline support.

The price of oil was bleeding out in the US session in a techncial breakout spurred on by a Tweet from Trump telling OPEC to ‘relax’ on prices. The tweet was enough to even wipe out gains made due to U.S. output hitting records of 12 million barrels per day is countering the positives from easing trade tensions, sanctions on Iran and Venezuela and OPEC cuts.

Prices had initially been making good progress on the upside, riding the sentiment of progress in trade talks between the US and China which took prices to multi-month highs.
Trump tweeted on Sunday that he will extend a deadline for increasing tariffs on China imports and would instead meet with Chinese President Xi Jinping at Mar-a-Lago in Palm Beach to wrap up a deal. However, as if in the same breath, President Donald Trump called on OPEC to further prevent rising prices, saying in a Tweet, “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”  

WTI levels  

Technically, critically, WTI holds above the Ichimoku cloud and daily trend line support around 53.30, thus remains in bullish territory, albeit with trending lagging span catching up with price along with stochastics overbought, indicating that the bull trend is in jeopardy. The price has dropped below a key trend line support on the shorter charts as well with a drop below the 55.71 early Feb highs/resistance level. However, significantly, the 38.2% retracement of the October to December sell-off around 55.55 was also broken with the price printing a session low of 55.11. Near-term prospects of 60.00 are in the rearview mirror, for now. On the flip side, a continuation of the downside can target 54.20 and a subsequent break below 54 opens prospects of a test of that Ichimoku cloud top and daily trend line support.