The oil price has registered an amazing drop and it continues to be under massive selling pressure. WTI grade has reached fresh new lows at $49.63, has not seen so low since January 2019. The price has decreased by 3.69% in the start of this week and by 8.63% from the last week high. It remains to see what will happen in the upcoming days and if the price validates the breakdown below the $50.53 major support.
You can see on the Daily chart that the WTI oil is trading within an extended sideways movement, between $63.36 and $50.53. It has dropped like a rock after the false breakout with a great separation above the 63.36 level and above the upper median line (uml) of the black ascending pitchfork.
WTI oil dropped sharply amid the coronavirus fear as the global risk led the price towards the 50.00 psychological level. Moreover, lower oil demand based on the current situation could drive the price much lower in the upcoming period.
The price has increased today, but it could drop anytime, that's why you should be ready for another bearish momentum as long as the price is located below the median line (ML) of the descending pitchfork. WTI oil has escaped from the ascending pitchfork's body, the breakdown has attracted more sellers on the short term, but I believe that only a valid breakdown below $50.53 and below the $50.00 psychological level will really confirm a further drop.
A Bullish Engulfing or a Pin Bar in this support area could signal that this downward movement is completed for now and maybe a potential rebound will develop. The median line (ML) of the descending pitchfork represents a very strong dynamic resistance, support has turned into resistance, the price is under pressure as long as it is trading below this line. So, the outlook is still bearish on the Daily chart.
