Fundamental Overview
Despite the recent OPEC+ extension of the voluntary output cuts, Crude oil sold off as the price broke the support of the May range. The drop though might have been just technical as the bearish momentum picked up on the breakout. The price eventually bottomed around the $73 region and erased all the losses.
More recently, the market got a boost from the strong US NFP report as that showed that demand is likely to remain strong 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 are still present.
In the big picture, better growth expectations and positive risk sentiment should be tailwinds for the market, but we will need to crack the strong resistance at the $80 level first to increase the bullish momentum further.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil broke the strong support around the 76.50 level and sold off as momentum players piled in. The price bottomed around the 73.00 level and eventually extended the rally following the US NFP report.
The price is now breaking the trendline which might increase the bullish momentum into the key 80 resistance. That’s where we can expect the sellers to step in again with a defined risk above it to position for a drop into new lows. The buyers, on the other hand, will want to see the price finally breaking higher to increase the bullish bets into the 90.00 region.
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 momentum. 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 below the trendline and the 76.85 level to regain some control and position for a drop into new lows.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have also the confluence of the 50% Fibonacci retracement level around the trendline. This should technically strengthen the support around the 77.00 region, 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 get the US CPI data and the FOMC rate decision. Tomorrow, we have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
