Fundamental Overview
Crude oil rebounded from the lows as the buyers might be looking forward to the Fed’s easing cycle. As a reminder, the positioning in crude oil is at record lows and the sentiment is very bearish.
These factors can generally offer great contrarian opportunities. The main reason which could drive oil prices higher is the imminent Fed’s easing into a resilient economy. Lower rates generally lead to an increase in the manufacturing activity and therefore increased demand for crude oil.
Yesterday, we got the US Industrial Production data and as expected the hurricane related drop in July was erased.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil rejected the key 71.67 resistance as the sellers stepped in to position for a drop back into the 65 handle. The buyers will need the price to break above the resistance to start targeting the major trendline around the 76 handle.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that once the price broke above the minor downward trendline the buyers piled in for a rally into the resistance. There’s not much else we can glean from this timeframe, so we need to zoom in to see some more details.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong support zone around the 68.50 level where the price got rejected from several times in the past weeks. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 76 handle.
The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 65 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have the FOMC Rate Decision and tomorrow, we get the latest US Jobless Claims figures.
