WTI oil returned to red on Tuesday after Monday’s recovery attempt from new seven-week low lost steam on probe through broken Fibo support at $76.39 (38.2% of $61.83/$85.39) and failed to register daily close above this level.
Oil came under fresh pressure on talk that the Unites States and major Asian consumers will release their strategic crude reserves to lower energy prices, despite growing concerns that rising Covid-19 cases and new restrictive measures in Europe, may hurt demand.
On the other side, OPEC+ group of major oil producers said it could adjust its plan to raise oil production if large consuming countries release their reserves or new wave of virus dampens demand.
Initial negative signal was generated on completion of bearish failure swing pattern on daily chart, with further downside extension and repeated close below pivotal Fibo support at $76.39, adding to reversal signals.
Daily chart stochastic is oversold and momentum turned north, suggesting that bears may take a breather before resuming towards next pivotal supports at $74.11 (100DMA) and $73.61 (50% retracement of $6.83/$85.39), violation of which would confirm reversal.
Broken Fibo 38.2% support ($76.39) reverted to resistance which so far caps and guards upper pivots at $78.22/82 (Nov low / falling 10DMA).
Res: 76.39; 77.59; 77.91; 78.22.
Sup: 75.41; 74.75; 74.11; 73.61.