Trump’s Comments Made Oil Plunge
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
The first Monday of May was marked by a significant plunge in Brent prices. In the morning, the asset lost more than 2.5% and reached $68.79 USD. Still, a bit later it was able to recover.
The key trigger for selling oil was an announcement from U.S. President Donald Trump of further increase of import tariffs on Chinese goods. According to his Sunday tweet, it may happen as early as this Friday.
He twitted that “For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
U.S. politicians are against this idea.
China, in its turn, hasn’t cancelled the talks that are scheduled for Wednesday in Washington and it seems like it doesn’t want to. If it becomes known that the talks are called off, Brent will surely hasten its decline. It may happen because global oil producers may feel demand is declining.
Even now, one can see that investors are very worried by delays in US-China trade talks. At first, it was anticipated that the parties would come to an agreement by April 1st. Now it’s May and the opponents are still in deadlock. This situation has a negative influence on oil prices.
As we can see in the H4 chart, Brent has completed another descending wave; right now, it is trading upwards. After breaking the previous descending channel, the price may resume trading inside the uptrend to reach $76.50. This potential growth is confirmed by Stochastic Oscillator, as its signal line is getting ready to reverse and leave the “oversold zone”. Later, the pair may break the descending channel along with 50.00 to continue the uptrend.
In the H1 chart, Brent is slowly growing towards $71.30. After breaking it, the pair may continue growing with the first upside target at $73.25. From the technical point of view, it is confirmed by MACD Oscillator, as its signal line is reversing away from the “oversold zone.” After breaking 0.00, the uptrend may get stronger.
Disclaimer
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.
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