Fundamental Overview
Crude oil continues to remain supported as the buyers might be looking forward to the consequences of the Fed’s easing cycle on economic activity. 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 Fed easing into a resilient economy. Lower rates generally lead to an increase in the manufacturing activity and therefore increased demand for crude oil.
On Monday, we get the S&P Global PMIs and that will be the first test although the data might not incorporate the Fed’s decision, so the ISM Manufacturing PMI in the first week of October might be a better gauge.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil rejected the key 71.67 resistance but eventually came back to retest it. The buyers will need the price to break above the resistance to start targeting the major trendline around the 76 handle. The sellers, on the other hand, will likely step in again with a defined risk above the resistance to position for a drop into the 65 handle.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent rejection from the resistance and the bounce on the support zone around the 68.50 level. 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 minor upward trendline defining the current bullish momentum on this timeframe. If we get a pullback into the trendline, we can expect the buyers to lean on it to position for a rally into the major trendline.
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.