Fundamental Overview
Crude oil has been under sustained pressure since the beginning of July. Things got even worse as Trump’s odds of winning soared after the failed assassination attempt. He is a great supporter of the “drill, baby, drill” slogan and he will likely put an end to the war in Ukraine if he gets elected.
Those should be bearish drivers for crude oil as expectations of increased supply could give the buyers a hard time for new cycle highs. On the macro side, we haven’t seen much change, on the contrary, the latest US data continue to show a resilient economy with even some pickup.
So, we now have some bearish drivers on the supply side but bullish drivers on the demand side. Overall, it shouldn’t give conviction for huge moves on either side and the market will likely continue to trade in a range.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil broke through the key 80 support zone and extended the drop into the 77 level as the sellers piled in more aggressively while the buyers folded.
We can expect the buyers to step back in around this level with a defined risk below it to position for a rally back into the key 80 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 72.50 level next.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong support around the 77 level as we can also find the 61.8% Fibonacci retracement level for confluence. We have also a minor downward trendline defining the current bearish momentum.
If the price were to break higher, the buyers should gain some more confidence and increase the bullish bets into the 80 level. The sellers, on the other hand, will likely keep on leaning on the trendline to position for a break below the 77 support.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now around the trendline. This is where the sellers will look for a rejection and a drop into new lows, while the buyers will look for a breakout to the upside. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Flash PMIs. Tomorrow, we will get the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
