WTI crude oil is resuming its slide as it completed a quick pullback to a short-term broken support. Price is now testing the next targets marked by the Fibonacci extension tool.
The 50% level seems to be holding so far, but a move lower could take it down to the 61.8% Fib at $33.58 per barrel or the 78.6% level at $32.67 per barrel. The full extension is at $31.50 per barrel.
The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the downtrend is more likely to gain traction than to reverse. The gap between the indicators is also widening to reflect stronger bearish pressure.
RSI, however, seems to be pulling higher to signal a return in bullish momentum. Stochastic has already reached the oversold region to show that sellers are exhausted, and turning higher could mean that buyers are taking over. If so, another pullback could occur and the 100 SMA could once again hold as dynamic resistance.
Crude oil appears to be sobering up to grim forecasts for the global economy, especially since the Fed reiterated in their statement last week that it will be a long road to recovery. Fed head Powell has a speech coming up within the week and might highlight these downbeat views, possibly leading to another leg lower for riskier assets.
Geopolitical risks also weigh on risk appetite and demand for commodities, particularly with protests getting worse in the US. Inventory data would likely provide more short-term volatility, as a higher number of barrels in stockpiles would confirm the downturn in demand.
On the other hand, a surprise reduction in inventories could signal that demand for fuel and energy is starting to pick up now that some airlines are resuming more operations.