Fundamental Overview
Crude oil has been on an incredible run since bottoming out around the $72.50 level in early June. The market eventually caught up to the positive drivers we had back then with the OPEC+'s extension of voluntary output cuts, and the pickup in economic activity seen from the global PMIs. The prospects of major central banks easing their policies was also a contributor for the positive future demand outlook.
More recently, the price got rejected from a key resistance level and eventually extended the drop following a soft US NFP report. We basically have an economy that is slowing but still growing. We will see if the market will be able to keep the positive sentiment on soft landing hopes or start to worry about a recession.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil got rejected from the 84.50 resistance and extended the drop following the soft US NFP report. From a risk management perspective, the buyers will have a better risk to reward setup around the 80 support zone. The sellers, on the other hand, will want to see the price breaking below the 80 support to increase the bearish bets into the 77 level next.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently dropped below the minor trendline that was defining the bullish momentum. This technically signals a switch in momentum with the sellers in a near-term control. We can also see that we have the 38.2% Fibonacci retracement level of the entire rally from the lows standing around the key support. That’s been a key level for the market.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action. We have a nice resistance around the 82.70 level where we can also find the 38.2% Fibonacci retracement level of the drop from the 84.50 level.
From a risk management perspective, that’s where the sellers will likely step in with a defined risk above the resistance and position for a drop into the key 80 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to regain some control and start targeting a break above the 84.50 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed Chair Powell testifying to Congress and the markets will be focused on any view or hint about monetary policy after the recent NFP report. Thursday will be the most important day of the week as we get the US CPI and the US Jobless Claims figures. Finally, on Friday, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
