Fundamental Overview
Crude oil sold off pretty heavily in the latter part of last week as we got some very weak US data releases first with the ISM Manufacturing PMI and then with the NFP report. The market eventually bounced back on Monday and extended the gains yesterday with the appointment of the new Hamas leader being the likely catalyst as he’s seen as more hard-line.
This follows the assassination of the former Hamas leader Ismail Haniyeh in Iran with Israel being blamed for the attack. The tension in the Middle East continues to be high as the world is waiting for Iran’s retaliation and fears a wider escalation. This keeps the supply side of the equation uncertain and raises the geopolitical risk premium.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil dropped all the way back to the 72.50 low where we got a bounce on Monday and then a stronger rally on Wednesday. The sellers will want to see the price breaking below the 72.50 level to increase the bearish bets into the 65.00 price region.
The buyers, on the other hand, will look for a rally back into the 80.00 level although we will need some key breaks on the lower timeframes to get the momentum going.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price yesterday broke above a minor resistance around the 74.50 level and extended the rally into the 76.00 handle. The price is now pulling back to retest the level and that’s where we can expect the buyers to step in with a defined risk below the level to position for a break above the major trendline.
The sellers, on the other hand, will want to see the price falling below the level to increase the bearish bets into the 72.50 level 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 38.2% Fibonacci retracement level adding confluence to the support zone around the 74.50 level. If the price rallies into the major trendline, we can expect the sellers to lean on it to position for a drop back into the lows with a better risk to reward setup. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures which will likely be a strong market moving release given the market’s focus on the labour market. The market will also pay close attention to Fed members’ comments with Fed’s Barkin scheduled to speak later in the day.
