OIL: downswing imminent
Fundamentally, we have the following layout. In the oil market, there is relative silence and neutral mood. Globally, investors are cautious about the second-wave virus hit. Together, these factors make the oil price hang in the channel between $35 and 40$ like in limbo. Therefore, it is unlikely that it moves far beyond that channel until the global mood fundamentally improves.
In the short-term, if the price insists on testing the resistance of $40, we will have a high likelihood of a further drop closer to the middle of the channel at $37.5 as per the technical chart formation. Previous candles dropping sharply to the lower side of the channel confirm that this is indeed a possibility.
Therefore, watch how WTI price behaves the following hours – it may well drop to previous support levels within the current channel.
