Chart of the day: XTIUSD
WTI crude (XTIUSD) sold off 2.7% yesterday and closed through the 61.8% Fib level of the October - January rally (red horizontal line). We’re looking at further downside in today’s trading.
Prices have fallen on the anxiety that the Coronavirus outbreak in Wuhan China could interrupt the nearly 3 billion trips planned for this year’s Chinese New Year celebrations. Cancelled travel plans would mean fewer trips around and out of China, reducing fuel consumption.
It’s a demand problem this time, unlike the supply concerns during US-Iran tensions that saw a similar decline earlier this month.
Chinese officials have prohibited travel in and out of Wuhan, the city of 11 million people at the center of the outbreak. Public gatherings scheduled for the holiday have been called off, and even tour groups have been asked to remain in the city. It’s a developing story we expect to escalate.
After breaking through the 61.8% Fibonacci retracement of the October - January rally, we’re now watching support from the November double-bottom at the 55.00 level (blue dashed line).
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