Fundamental Overview
Crude oil has been stuck in a range for the entire month of May despite better global growth expectations amid China and other major central banks beginning to ease policies, improving PMIs and more recently the OPEC+ extending the voluntary output cuts.
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 first to gain some more conviction.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil couldn’t break above the key 80-81 resistance and eventually sold off all the way back to the bottom of the range around the 76.50 level. 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 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 70 handle.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the range between the 76.50 support and the 80.50 resistance. We’ve been stuck in this range for a little over a month now as the market awaits a catalyst to trigger a more sustained trend. For now, we can expect the market participants to “play the range” by buying at support and selling at resistance.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a good resistance zone around the 77.50 level where we can find the confluence of the trendline and the 50% Fibonacci retracement level. That’s where we can expect the sellers to step in with a defined risk above the trendline to position for a break below the support with a better risk to reward setup.
The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ISM Manufacturing PMI. Tomorrow, we get the US Job Openings data. On Wednesday, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP report.
