The OPEC+ production cuts
and the expectations of more economic stimulus in China, gave Crude Oil enough
strength to break above the key resistance zone around the $75 level. After a
brief rally, the price stalled and reversed as the PBoC held off from delivering
more rate cuts. Last week though, China has promised more stimulus, giving another boost to Crude Oil that
led to a rally towards the $83 resistance. The manufacturing sector remains in
recession for most advanced economies and this week we saw the Chinese Manufacturing PMI falling back into contraction for
the first time in three months. Overall, there are still lots of headwinds for
Crude Oil with the long-term bias remaining bearish.
WTI Crude Oil
Technical Analysis – Daily Timeframe
WTI Crude Oil Daily
On the daily chart, we can see that Crude Oil has
eventually reached the resistance zone
near the $83 level where strong sellers stepped in with a defined risk above
the level to target another selloff into the lows. There’s a good support level
at $77.29 where we can find the previous swing high level, the 61.8% Fibonacci
retracement level and the red 21 moving average for confluence. This is
where the buyers are likely to pile in to target again the resistance and
ultimately a breakout.
WTI Crude Oil Technical
Analysis – 4 hour Timeframe
WTI Crude Oil 4 hourt
On the 4 hour chart, we can see that the selloff
from the resistance yesterday has led to a break below a key trendline. The
price pulled back a little soon after to retest the trendline and got rejected
again. The moving averages have also crossed to the downside confirming the
change in the sentiment, so we should see more sellers piling in here targeting
the $77.29 support.
WTI Crude Oil Technical Analysis
– 1 hour Timeframe
WTI Crude Oil 1 hour
On the 1 hour chart, depending on the
price action, we can see that the sellers will have two different options where
to sell from:
- If the
price rallies from here, the sellers are likely to lean on the previous swing
low support now turned resistance where we can also find the 38.2% Fibonacci
retracement level and the red 21 moving average. - Alternatively,
if the price continues to fall and breaks below the recent low at $79.00, the
sellers should jump onboard and ride the selloff into the $77.29 support.
The buyers, on the other hand, will need
the price to rise above the $80.62 swing point to confirm the change in the
bias and start positioning for more upside.
Upcoming Events
Today we have the US
Jobless Claims and the ISM Services PMI, while tomorrow it will be the time for
the main event of the week: the US NFP report. If the data is benign, we should
see Crude Oil climbing up as the soft-landing narrative expectations would
strengthen. If the data is bad though, we are likely to see a selloff as
recessionary fears should spill over the markets. Moreover, if the data is too
strong, the market may expect a more hawkish Fed and eventually lead to a fall
in Crude Oil due to headwinds like higher rates, higher US Dollar and risk off
sentiment.
See also the video below: