Fundamental
Overview
Crude oil reversed all of
its losses from the last week of May, when, despite OPEC+’s extension of
voluntary output
cuts, the market fell as the price broke out of a month-long range. The dip
could have been purely technical, as bearish momentum increased following the
breakout. The price eventually bottomed around $73 and is currently back at the
crucial resistance level of $80.
The market got also a boost
from the strong US NFP report recently as that showed that demand is
likely to remain solid amid the global growth pickup as depicted also by the
PMIs. Moreover, we have some major central banks beginning to ease their
policies and China will likely continue to do so as deflationary forces remain
present.
In the big picture, better growth prospects and positive risk sentiment
should be tailwinds for the market, but we must first break through the key resistance
at $80 to boost the bullish momentum even further.
Crude Oil
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that crude oil had a V-shaped recovery from the 72.50 level with the
bullish momentum increasing after the strong US NFP report and the break of the
trendline.
The price is now rejecting
the key resistance
around the 80 level as the sellers start to pile in with a defined risk above
the resistance to position for a drop into new lows with a better risk to
reward setup. The buyers will want to see the price breaking higher to gain
even more conviction and increase the bullish bets into new highs.
Crude Oil Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have now an upward trendline defining the current bullish trend. If
we get a pullback into the trendline, we can expect the buyers to lean on it
with a defined risk below it to position for a continuation of the rally and
the break of the 80 resistance.
The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into the 77 support and targeting a break below it.
Crude Oil Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have also the confluence of the 50% and 61.8% Fibonacci retracement levels around the trendline. This
should technically strengthen the support around the 79 level, so it will be a
key zone to keep an eye on in case the price falls into it. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today we have the US Retail Sales and US Industrial Production. On Thursday,
we get the US Housing Starts, Building Permits data and the latest US Jobless
Claims figures. On Friday, we conclude the week with the and US PMIs.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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