West Texas Intermediate oil futures are falling sharply on Monday as investors bet diplomatic efforts by Ukraine and Russia could quickly end the military conflict between the two countries. Meanwhile, a surge in cases of the omicron variant of the coronavirus in China has scared traders enough to cut long positions on fear of lower demand.
At 13:20 GMT, May WTI futures are trading at $101.82, down $4.48 or -4.21%. The fournes, the United States Oil Fund (USO) ETF settled at $76.35, up $2.29 or +3.09%.
According to Reuters, negotiators have been meeting this weekend and have been more optimistic than to date, suggesting there could be positive results in the coming days. In addition, today they meet again by videoconference, so it will be necessary to closely monitor what is in this regard.
Reuters has also reported that China, the world’s largest crude oil importer and second-largest consumer after the United States, is seeing a surge in cases of the highly contagious VARIANT omicron coronavirus spreading to more cities, causing breads from Shanghai and Shenzhen.
Technical analysis of the daily swing chart
The main trend is up according to the daily swing chart and if we break above the $126.42 level it will resume its way up, while breaking below $85.81 would make the trend change to down.
The minor trend is also up but if we lose $88.49 it will change to down.
The market has been consolidating slightly above the March 9 low of $99.55 for three sessions, so we think that price could be the starting point for a possible acceleration to the upside.
The short-term range is from $85.81 to $126.42 and the market is currently testing the lower end of its recovery zone found between $106.12 and $101.32.
The lower range is from $126.42 to $99.55 and
the retracement zone between $112.99 and $116.16 series of the nearest target.
Technical forecast for the daily swing chart
Price action suggests that the direction of the May WTI Oil futures contract today will likely be determined by trader reaction to the short-term Fibonacci level at $101.32.
A sustained move below $101.32 indicates the presence of sellers and could send us looking towards the former at last week’s low of $99.55. Therefore, there is a possible risk of activation due to an acceleration in the bay, with the following targets being placed at a low of $88.49 and a low of $85.81.
A sustained move above $101.32 will signal the presence of buyers and if it creates enough upside momentum a rally towards the 50% level at $106.12 can be expected.
Breaking above $106.12 indicated that buying is getting stronger and could trigger an acceleration towards the next targets at $112.99 and $116.16.
This article was originally published on FX Empire