Two Trades To Watch: WTI Oil, Dax - Tuesday, Aug. 2

Oil prices slide below $71, API inventory data to come. Dax continues to consolidate after failing to break out in the previous session. 

Oil slides below $71.00 

After sliding 3% in the previous session oil prices are on the back foot again. Concerns over coronavirus curbs combined with slowing factory activity in China and the US, the world’s largest importers of oil, saw oil book its largest daily loss in 2 weeks (OIL, BNO). 

With COVID cases also on the rise in China, concerns are growing that further mobility restrictions could be brought in. 

This concerns come following data yesterday that revealed that factory activity in China, as measured by the Caixin Manufacturing PMI declined to 50.3, just above the 50 level that separates expansion from contraction, versus 51 expected. 

The US ISM manufacturing PMI for July dropped to 59.5 versus 60.4 forecast. 

API inventory data is due today and are expected to have declined for a third straight week. 

Where next WTI oil prices? 

WTI oil failed to break above its month old descending trendline resistance last week, falling lower to support at 7040 yesterday’s low. The price trades below its 50 & 200 sma on the 4 hour chart. 

The RSI is supportive of further losses, in bearish territory, pointing lower but out of oversold territory. 

A break below yesterday’s low of 7040 could open the door to 6980 July 22 low and then a deeper sell off.  

Any recovery would need to retake the 50 sma at 71.00 and the 200 sma at 72.44 in order to attack 74.00.  

Dax consolidation continues 

European stocks are set for a mixed open as investors weigh up corporate earnings against concerns that Chinese regulatory authorities will turn their attention to the gaming industry. 

The automobile industry will be in focus after BMW posted better than expected Q2 profits versus a loss in the same period last year. 

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