Brent crude price action for Monday saw the asset take a massive hit as new coronavirus fears hit the market. The weekend saw reports out of several countries that indicate that global spread of the coronavirus disease is now on the rise, with sharp increases in the number of new cases and deaths in South Korea and Italy. Iran, a major crude oil player, is also seeing an increase in new coronavirus cases with an MP alleging that more than 50 deaths have occurred in the city of Qom, Iran.
Brent crude price is now trading at 55.96, a full $1.66 lower after failing to find any bids on the asset in what may be the third straight losing session. Further adding to the downside pressure is the decision by the OPEC+ countries not to hold an early meeting to cut production output, after Russia voiced its opposition to a previous date as well as deeper production cuts. This scenario sets the stage for the assembly of OPEC+ on March 6 as earlier scheduled.
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Technical Outlook for Brent Crude Price
Brent crude price formed a bearish Gartley pattern, with the downside move commencing at point D, which was shown on the charts to be close to the 60.26 price resistance. Today’s price action has torn through the 57.47 support level, though the time/price filters for a breakout are yet to be established.
Price has found support at 55.59 but would require a double successive candle close below 57.47 to confirm the breakdown of that price level. This scenario would allow Brent crude price to retest the 55.59 support area. A possible break of that level opens the pathway towards 53.26. The RSI oscillator still has some space before it hits oversold levels, which may offer prices some leeway for further downside action.
On the flip side, failure to break the 57.47 price area could allow for a pullback towards 58.69. The momentum is quite bearish, and any pullback moves may be a way of sellers looking for cheaper re-entries at possible rally points.