Fundamental
Overview
Crude oil found some
support from Powell’s dovish tilt but eventually couldn’t break above some key resistance
levels and wiped out all the gains. The focus has now switched to the NFP
report due next week as that’s going to influence interest rates expectations
and the Fed’s stance.
If we get strong data, we might see some short term weakness as the hawkish repricing weighs on growth expectations, but if the Fed speakers maintain their easing bias, then we could see crude oil breaking out
into new highs and likely extended the gains into the 70.00 price area on expected
higher demand.
Soft data, on the other hand, could be bearish in the short-term but as the market increases the dovish bets and the Fed eases, it should eventually support the market.
Crude Oil
Technical Analysis – Daily Timeframe
Crude Oil Daily
On the daily chart, we can
see that crude oil probed above the key resistance
zone around the 64.00 handle before falling back below it as the price rejected
the major downward trendline.
The sellers will likely continue to pile in around these levels with a defined
risk above the trendline to position for a drop into the 59.77 level. The
buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish setup and start targeting the 70.00 handle
next.
Crude Oil Technical
Analysis – 4 hour Timeframe
Crude Oil 4 hour
On the 4 hour chart, there’s
not much we can glean from this timeframe, so we need to zoom in to see some
more details.
Crude Oil Technical
Analysis – 1 hour Timeframe
Crude Oil 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline defining the bearish momentum. The
sellers will likely continue to lean on the trendline to keep pushing into new
lows, while the buyers will look for a break higher to position for a rally
into the major trendline targeting a breakout. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims
figures. On Friday, we conclude the week with the US PCE price index.
