The world is facing a great financial recession period due to the Coronavirus pandemic. People, as well as financial institutes, are facing great difficulties to cope up with the situation. Many financial institutions are going bankrupt and traders are getting margin calls. Hope this situation will be over very soon.
We know that before an economic development phase world may go through a recession. The oil price war between OPEC and non-OPEC countries has made this situation worse. Now even they are facing great financial deficits to meet up their annual budget. Oil, the most important commodity in the world now came to the lows we have seen in the past 20 years ago. The price war flooded the market with oil when demand is declining and storage is almost filled up.
From another perspective, we can see the producers are getting the price well below the breakeven price. Also, we can see in the United States many rigs have been closed because it’s not cost-effective. Even many small producers are already bankrupted. This situation is not good for the oil-producing nations. Already Saudi Arabia and Russia are facing a great amount of budget deficit.
So, from a trader point of view, this situation cannot run for long. Demand may not rise very soon but a big amount of production cut is coming very soon to reflect and stabilize the price of oil. This gives us a good chance to invest in oil but not as a day trading perspective. From my analysis and market view oil (WTI Crude) maximum can go to 10$ per barrel also this may be also very much pessimistic view. We may see an upward movement very soon in the coming weeks.
As a technical trader from the charts, we can say it is a very high time to go for longs. No short trades, please.
Hoping the trend line will not break below. If it is broken there is a huge resistance zone from 13.77 to 16.59.
To be more confirmed we can wait for a breakout confirmation above the trendline.
The market is so volatile and unpredictable this moment please follow proper money management. Calculate your level of margin call stays safe.
Technical Market Analyst