Fundamental Overview
Crude oil reversed all of its losses from the last week of May, when, despite OPEC+'s extension of voluntary output cuts, the market fell as the price broke out of a month-long range. The dip could have been purely technical, as bearish momentum increased following the breakout. The price eventually bottomed around $73 and is currently back at the crucial resistance level of $80.
The market got also a boost from the strong US NFP report recently as that showed that demand is likely to remain solid amid the global growth pickup as depicted also by the PMIs. Moreover, we have some major central banks beginning to ease their policies and China will likely continue to do so as deflationary forces remain present.
In the big picture, better growth prospects and positive risk sentiment should be tailwinds for the market, but we must first break through the key resistance at $80 to boost the bullish momentum even further.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil had a V-shaped recovery from the 72.50 level with the bullish momentum increasing after the strong US NFP report and the break of the trendline.
The price is now rejecting the key resistance around the 80 level as the sellers start to pile in with a defined risk above the resistance to position for a drop into new lows with a better risk to reward setup. The buyers will want to see the price breaking higher to gain even more conviction and increase the bullish bets into new highs.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have now an upward trendline defining the current bullish trend. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to position for a continuation of the rally and the break of the 80 resistance.
The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 77 support and targeting a break below it.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have also the confluence of the 50% and 61.8% Fibonacci retracement levels around the trendline. This should technically strengthen the support around the 79 level, so it will be a key zone to keep an eye on in case the price falls into it. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Retail Sales and US Industrial Production. On Thursday, we get the US Housing Starts, Building Permits data and the latest US Jobless Claims figures. On Friday, we conclude the week with the and US PMIs.
