Bottom line: WTI Crude might have carved a major bottom around $0.01/barrel last month. The long term structure remains bullish against $0.01 as traders target $29.00/30.00 levels in the short term.
Fundamental Outlook:
Oil prices surge as WTI Crude trades around $24.00/barrel and Brent above $28/barrel respectively. The production cut decision taken by the OPEC last month will be in effect from this month and this could be a positive for Oil prices. The yearly target could be as high as $65/barrel, the January 07, 2020 peak.
DAX had gaped down on Monday, in line with most Global Indices, and closed over 3.5% lower at 10466. The indice is set to remain under pressure as COVID-19 induced recession looms, along with man-made trade war fears between the US and China as Trump talks of tariffs as a retaliation over COVID-19 pandemic. The historic “Sell In May and Go Away” sentiment again shadows most investor psychology.
Gold has seen some selling pressure and trades below $1700 mark as we write this article. As most economies open up after several weeks of shutdown, sentiment may have drifted towards more risky assets. This could be short lived though as the US Non-Farm Payrolls forecasting over 21 million jobs lost.
Technical Analysis:
WTI Crude remains completely in control of bulls as they charge above $24/barrel today. A major bottom could be in place at $0.01 levels as prices plunged historically last month. Bulls remain poised to take out resistance around $29.00/30.00 levels to confirm a trend reversal.
Please note $29.00 is the April 03, 2020 high as WTI Crude reversed lower again, and dropped to $0.01 levels. A break above $29.00 would mark the beginning of an up-trend that could last for several months to come.
Most traders might be willing to hold long positions taken earlier and book profits around $29.00/30.00 mark. A corrective drop thereafter would provide another opportunity to build long positions.
Prepared by
Harsh Japee, Technical Analyst.
WTI Crude Chart
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