Crude Oil Plunges As Bears Gain Strength Amid Global Uncertainty

Crude oil inched lower on Friday, dragging the price of West Texas Intermediate (WTI) to less than $50 a barrel once again as bears gained strength amid uncertainty in global financial markets. The technical bias remains bearish because of a Lower Low in the recent downside move.

Technical Analysis

As of this writing, the price of crude oil is hovering near 48.79. A support may be noted around 48.20, the horizontal support area ahead of 46.04, the confluence of a horizontal support as well as the swing low of the latest major downside move as demonstrated in the following daily chart.

On the upside, the black gold is likely to face a hurdle near $50 a barrel, the confluence of a psychological number as well as the horizontal resistance ahead of 50.58, the swing high of the latest major upside rally and then 52.00, another huge horizontal resistance zone.

US Jobless Claims

The number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labor market. Initial claims for the state unemployment benefits increased 10,000 to a seasonally adjusted 268,000 for the week ended June 25, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast initial claims rising to 267,000 last week. Claims have now been below 300,000, a threshold associated with a strong jobs market, for 69 consecutive weeks, the longest streak since 1973. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, was unchanged at 266,750 last week.

Trade Idea

Considering the overall technical and fundamental outlook, selling crude oil around the current levels could be a good strategy in short to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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