WTI Crude oil extends weakness today and falls below $50 per barrel for the first time since Dec 15.
Yesterday’s sharp fall, triggered by unexpectedly strong build in crude stocks (8.2 mln bls build vs 1.1 mln bls forecast and 1.5 mln bls previous week) was the biggest one day fall since July 2016.
Fresh acceleration lower today was sparked by break below psychological $50 support and the base of thick daily cloud (spanned between $49.88 and $53.03) that acted as strong support zone.
Further downside is seen likely, as the price generated strong bearish signal yesterday’s close below $50.27 (Fibo 38.2% of $42.19/$55.22) and today’s violation of cloud top, close below which would be seen as another strong bearish signal.
Weakness may extend towards next strong support at $48.70 (200 SMA / 50% retracement / weekly Kijun-sen) initially, with break here to generate another strong bearish signal.
However, strongly oversold daily studies suggest that sharp bearish acceleration mmight be paused for corrective action.
Broken cloud base is now acting as initial barrier, ahead of broken 100SMA ($50.91) which sholud ideally cap.
Res: 49.88; 50.00; 50.91; 51.21
Sup: 49.18; 48.70; 47.90; 47.17