Oil took a beating yesterday, dropping over 3% on persisting fears that global economy is heading for a recession that will result in demand destruction. Stronger US dollar is also putting pressure on crude prices. On top of that, we have easing of geopolitical tensions as NATO ruled that the missile that landed in Poland, a NATO member, was not fired by Russia but was the Ukrainian air-defense missile that failed to self-destruct after intercepting the Russian missile. Fears that Russia struck NATO soil sparked an upward move in oil earlier this week and this impulse has been completely reversed after it became known that NATO-Russia military conflict is off the table, at least for now.
However, a look at WTI chart (OIL.WTI) from a technical point of view, suggests that crude prices may be set for a relief rally. Taking a look at OIL.WTI at H4 interval shows that price has been trading in a downward channel as of late. While there is still some way to go until the lower limit of the channel is reached, OIL.WTI reached an important support in the $81.50 per barrel area. This zone is marked with previous price reaction as well as equality of this and previous downward impulse (A=C). This suggests that bulls may soon take over control and launch an upward correction.
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Source: xStation5
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