Crude Oil prices remained supported in the past three weeks as the geopolitical risk in the Middle East stayed high around the Israel-Hamas war and possibility of a larger conflict comprising other Arab countries, especially Iran. The market is now looking past the conflict as the we haven’t seen any larger escalation even after the Israel ground offensive in Gaza. The risk is still there, but Crude Oil prices might now be more sensitive to growth fears as the surge in the last quarter may have increased the risk of a recession.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil erased all the gains from the outbreak of the Israel-Hamas war as the market is starting to look past the conflict given that we haven’t got any bigger escalation with Iran. The break below the key support around the $83 level is significant and it raises the odds of a bigger drop into the $78 level where we can find the previous swing low and the 127.2% Fibonacci extension level for confluence.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will be better off waiting for the price to pull back into the downward trendline where we can find also the red 21 moving average and the Fibonacci retracement levels for confluence. 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 $90 level.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might either get a pullback into the minor trendline or into the major one. The sellers may want to split their orders as both the resistances could work out. The buyers, on the other hand, will keep on piling in at every breakout.
Upcoming Events
This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Today we will get the US ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate decision. Tomorrow, we will see the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI. Weak data is likely to weigh on Crude Oil as recessionary fears will come back.
