The breakdown below the key $30 level last week has triggered a new downleg for oil prices.
After closing at $29.61 on Friday, US oil opened with a gap lower to spike down to $28.35 early on Monday. There is scope for a further decline as the technical are bearish. On the hourly chart, the tenkan-sen and kijun-sen lines are negatively aligned and RSI is falling in bearish territory.
Looking at the bigger picture, on the weekly chart, prices have been declining in a downward sloping channel from $50.89 (October 2015) to $28.35 today.
The next support level comes in at a previous low near $22.70 (2003 low).
The tenkan-sen and kijun-sen lines are negatively aligned on the weekly chart and pointing down, which is a bearish signal. Also the weekly Ichimoku cloud is falling, highlighting the bearish bias.
The RSI however is at oversold levels below 30. This could suggest that the current downside momentum could be getting exhausted and we could see some consolidation in the near term.
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