The oil market opened the trading week with a strong gap down. At the moment, Brent and WTI are down by more than 4%. Thus, investors react to the new quarantine measures introduced by the EU countries and the uncertainty associated with the upcoming US presidential elections.
With the beginning of the European trading session, the decline in oil prices slowed down, buyers were able to win back a small part of their losses, but the market is still under pressure.
Spain, France, Germany, Great Britain, Italy and other EU countries have significantly tightened quarantine measures to contain the spread of the coronavirus pandemic. The epidemiological situation in the United States remains difficult. Restrictions on the movement of citizens will significantly reduce the level of consumption of fuel and other oil products.
Markets also follow the US presidential election. Many investors fear potential disruption to the vote count as a record number of Americans voted by mail this year. In this case, the presidential campaign may end in a protracted legal battle for the final result, which will significantly increase the uncertainty.
On the chart, the price has renewed its 5-month trading low. At the moment, the price dropped below 34.00. The price is still under serious pressure, so while the bears keep it below 34.75, downward movement remains a priority.
The main scenario - a decline below 33.75 and an upward correction.
An alternative scenario - a breakdown of resistance at 34.75 and growth to 36.60.
The current fundamental outlook is negative. We consider shorts from levels of 34.75 and 36.60
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