Fundamental
Overview
Crude oil has been falling
steadily since topping around the $87.50 level following the mutual
retaliations between Iran and Israel. The drop has been kind of a
head-scratcher as the market didn’t respond positively to the global growth
expectations amid China and other major central banks policy easing, improving
PMIs and OPEC+ extending the voluntary production cuts until the end of the
year.
More recently though, crude
oil finally caught a sustained bid triggered by the strong US
PMIs last week and added to the gains yesterday following the strong US
Consumer Confidence report. Looking ahead, positive growth and sentiment
should be tailwinds for the market, but we will need to crack a strong
resistance first to gain some more conviction.
Crude Oil
Technical Analysis – Daily Timeframe
Crude Oil Daily
On the daily chart, we can
see that crude oil recently bounced around the bottom of the 80-76 range and extended
the rally following the break of the trendline.
The price is now trading right at the key 80-81 resistance.
This is where the sellers
will likely step in with a defined risk above the resistance to position for a
drop into new lows. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into new highs.
Crude Oil Technical
Analysis – 4 hour Timeframe
Crude Oil 4 hour
On the 4 hour chart, we can
see more clearly the resistance with the 38.2% Fibonacci
retracement level adding some extra confluence.
The price has been ranging between the 80 resistance and the 77 support and it
will be interesting to see if the recent data will be enough to trigger a
breakout to the upside or we keep trading inside this range.
Crude Oil Technical
Analysis – 1 hour Timeframe
Crude Oil 1 hour
On the 1 hour chart, we can
see that if this strong bullish momentum remains intact, the first support for
the buyers will be the steep trendline around the 80 level. A break below this
level should provide for a correction into the 38.2% Fibonacci retracement
level around the 79 level where we can also find the lower limit of the average
daily range. The sellers will likely increase the bearish bets on a break
below the trendline and target a drop back into the 77 support.
Upcoming
Catalysts
Tomorrow we will see the latest US Jobless Claims figures. On Friday, we conclude
the week with the Chinese PMIs and the US PCE report. Note that the OPEC+
meeting will be held on Sunday June 2nd where the group is expected
to extend the voluntary output cuts.