Fundamental Overview
Crude oil is finally finding some footing this week as the dip-buyers might be looking forward to the Fed’s easing cycle. As a reminder, the positioning in crude oil is at a record 13 years low 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.
Moreover, the recent debate between Trump and Harris might have also decreased the risk premium of higher supply as Harris chances of winning the election according to betting markets increased. This is just a marginal thing, but it could give the buyers a bit more confidence.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil recently broke through the 67.68 low and extended the drop into the 65.31 level before reversing. The target should now be the resistance around the 71.67 level.
That’s where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 64 support zone. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke above the minor downward trendline that was defining the bearish momentum. The buyers started to pile in more aggressively and with the break above the most recent lower high at 69.05 level, the short-term trend should have switched to an uptrend.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action and the break above the 69.05 level yesterday. We got a bit of a consolidation around the level, but the bullish momentum seems to be increasing.
We now have a minor upward trendline defining the bullish momentum and we can expect the buyers to keep leaning on it. The sellers, on the other hand, will want to see the price breaking below the trendline and the 69 handle to position for a drop back into the lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment report which is expected to print at 68.0 vs. 67.9 last month.
