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Crude Oil Price Likely To Accelerate Decline Below $54

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Aayush Jindal

Key Highlights

  • Crude oil price is facing a strong resistancenear $57.00 against the US dollar.
  • A major bearish trend is forming with resistancenear $57.10 on the 4-hours chart of XTI/USD.
  • The US crude oil inventories increased by 1.6million barrels in the week ending August 9, 2019.
  • The US Retail Sales in July 2019 might increase0.3% (MoM), less than the last +0.4%.

Crude Oil Price Technical Analysis

After testing the $50.50 support, crude oil price recovered nicely above $55.00 against the US Dollar. However, the price is facing a couple of key resistances near $57.00 and $57.50.

Crude Oil Price Technical Analysis

Looking at the 4-hours chart of XTI/USD, the price climbed higher from the $50.47 swing low this month. It broke the $54.00 and $55.00 support levels. Moreover, there was a break above the $56.50 resistance plus the 100 (red) simple moving average (4-hours).

However, the upward move was capped by the $57.50 resistancearea and the 200 (green) simple moving average (4-hours). More importantly,there is a major bearish trend is forming with resistance near $57.10 on thesame chart.

The price is currently declining below $56.00 plus the 23.6%Fib retracement level of the upward move from the $50.47 low to $57.42 high. Onthe downside, there are strong supports near the $54.20 and $53.60 levels.

The current price action suggests more downsides if there isa successful break below the $54.00 support area and the 50% Fib retracementlevel of the upward move from the $50.47 low to $57.42 high.

In the mentioned case, the price could revisit the $52.00support. Conversely, the price must climb above the $57.00 and $57.20resistance levels to continue higher towards $60.00.

Fundamentally, the US crude oil stockpiles report for theweek ending August 9, 2019 was released recently by the Energy InformationAdministration. The market was looking for a decline in crude oil inventoriesby around 2.761 million barrels.

However, the actual result was the opposite as the US crudeoil inventories increased by 1.6 million barrels. However, it was less than thelast increase of 2.385 million barrels.

Looking at major pairs, EUR/USD failed to gain strength above 1.1200, and GBP/USD is trading in a bearish zone below the 1.2200 resistance area.

Economic Releases to Watch Today

  • UK Retail Sales July 2019 (YoY) - Forecast +2.0%,versus +3.8% previous.
  • UK Retail Sales July 2019 (MoM) - Forecast -0.1%,versus +1.0% previous.
  • US Retail Sales July 2019 (MoM) – Forecast+0.3%, versus +0.4% previous.
  • US Initial Jobless Claims - Forecast 214K,versus 209K previous.
  • US Industrial Production July 2019 (MoM) –Forecast +0.2%, versus 0% previous.
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