Dim outlook for crude oil price
Since the implementation of production cap, crude oil shot up from $42.20 and closed at $48.99 in November. The price maintained its momentum higher, but it looks like the buying interest diminished as crude oil slip to $48.28 in March.
The slip in crude oil price contributed by the discovery of largest oil deposits since 30 years ago by Repsol at 9th March. This event leads the crude oil slide from $52.79 to $50.20 in just one day. OPEC members might come under agony as production cap might fail under growing supply from U.S.
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Bullish development in January and February erased by the drop in March. March price action put the price back below the monthly long-term trendline. If the price close below the trendline, the bull need to work hard to bring the price back above it in April to ensure bullish trend intact.
Despite the drop in crude oil price, traders could see the price supported at the trendline. The bounce is weak and may continue lower if momentum starts picking up. If the price manages to break below the trendline, $35.83 – $41.88 is the area of interest.
The daily chart of crude oil show support $47.80 – $48.73 hold the decline of price, but it also shows rejection at daily SMA 200 when the price attempt a rally. There is a possibility the price may continue lower and test the blue trendline before reversal happen.
Bullish trade: Look for a bounce from $47.80 and the blue trendline.
Bearish trade: Short position could be taken from daily SMA 200 and $50 handle.