It seems that June 12 this year has been an important date on the financial markets. From this date, across markets and places all around the world (commodities, stocks, indices and also currency pairs), investors have switched on the downside.
The bullish trends have exhausted almost on every asset that had taken advantage of the rebounds generated in March. This is the case for Oil.
The price action failed to break a resistance level set at $73. This level has been hit 4 times in June but eventually held. As a result, oil price has already corrected by 8.5%. There are no obvious support levels before $54, which is 18% lower than the current price. It could be the target for bear investors in the coming weeks.
The level of $54 is technically important as it is a significant previous high (point A on the chart) posted in late March this year. It was cleared by the rally triggered in early May. Technical analysts and traders will pay attention to this level as it may typically become a new low.
If you consider the bullish trend occurred between the extreme points of February and June (points B and C), then the level of $54 corresponds to a 50% retracement of this trend. That’s another reason to be considered as a key point, as both a target for bears and a potential rebound opportunity for bulls.
The indicators confirm that a further correction is more than probable. The MACD and the RSI have peaked similarly at mid-June, reaching extreme high values. Then they both triggered bearish signals at the same time. The MACD crossed below its moving average and the RSI left the overbought area as it plunged below the 70-line.
The 10-day moving average is also about to cross below the 40-day moving average. Many funds which have model-driven trend following strategies may go short soon and kick down the price significantly.
Only a break above $73 would give some fresh momentum and convince investors that the bullish trend is not over yet. But it’s really unlikely on the near-term.
