Image source: "Bank of Canada" by daryl_mitchell is licensed under CC BY-SA 2.0
In today's trading session the crude oil was trading at around 56 dollars per barrel in anticipation of Bank of Canada’s interest rate decision.
The country is ranking among the biggest producers and exporters of oil in the world, so the market for the black gold is very tightly correlated with the loonie’s strength and the policy of the BOC is acting as a bridge between the two.
In its previous monetary statement, which was concerned with the last overnight rate decision from the 6th of January 2019, the Bank of Canada channelled concerns about the future for the oil prices. In the official press release, some concerns were raised about the increasing supply of US oil, as well as staggering distress over global demand.
In the end, today’s decision by the BOC was to keep the overnight rate at the same 1.75% but the highlight of the day is the gloomy forecasts about strains on the Canadian economy weighing in from the shaken global demand in the oil market.
As a result of the eventful day for the Canadian dollar, some of that volatility was transcended to the crude oil’s market as well with the price initially falling below the major support level of 55.57, which coincides with the 38.2% Fibonacci retracement level. This is the third time since last Tuesday that the price attempts to break below the level but for now the support hold, even phasing out a false breakout. Here is the hourly chart for the crude:
Image source: Trendsharks ©, created with TradingView.com
The second most recent candlestick on this chart represents the significant initial spike in market volatility, however, the resulting hammer signifies a massive volume of bullish stop orders, being simultaneously opened at the 55.57 support.
We are yet to see whether the recent buying pressure is going to sustain a further bullish correction in the short-term or if the bears have to take charge and finally break the below the Fibonacci support level, once the initial volatility associated with the BOC’s overnight rate settles down.
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