SHORT SWING FOR THE MARKET BULLS

May 8, 2020

The new month isn't exactly off a great start so far for risk trades. After the historic April 20th on the oil price for the first time closing at $0.01 per barrel, price action has been able to recover some grounds, as it couldn't go deeper in the charts, of course, price action register a recover of 244K% as the new high on May 6th touching $27.95 per barrel.

The market remains under bearish pressure as production cuts won't ease or improve the impact on the demand sector as long as the trending COVID-19 "plandemic" is still capturing the spotlights, as quarantine, lockdowns and social distance policies remain, the most prominent world economies contraction is unavoidable. In the following weeks, expect economic releases to show worse conditions in the global economy, representing the height of downturn for most majors economies, no assuming much good news during this time, let us move on into the technical charts for the oil market.

Reading the charts; after seven days' rally, the price action had reached the previous strong resistance level in confluence with Fibonacci level 0.5 stopping the rally as a clear technical correction. Price action has formed a triple top in this level; with stochastic in an overbought area, we could expect a downturn correction before the market can recover some strength and break the $27 handle. With a MACD in a bullish bias and the 200SMA still slopping down and overextended, we should consider entering the market only with additional confirmations from the technical side as the market remains under intense pressure from a global glut.

With 27 million bpd removed from the market in April and the COVID-19 cases report rising, oil demand remains jeopardized. However, as it is widely known, the market is always benevolent to those smart investors and traders who take patience, usually in a sit-and-wait mode, before placing position. So, let's keep smart and sharp, as is expected in the short-term horizon, a solid hurdle around the $28 handle. Let us enjoy and recharge batteries in this weekend ahead and hopefully see you all next Friday.