Crude Oil recently broke through the key $83 resistance following the strong US ISM Manufacturing PMI and some geopolitical risk in the Middle East after Israel killed an Iranian general. For now, the fundamentals support more upside for Crude Oil as we are seeing a reacceleration in economic activity and the pickup in China’s performance seems to be gathering steam.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil broke through the key $83 resistance where we had also the upper bound of the channel as an extra barrier. This breakout should point to further gains ahead with the $89 level as the next target. If the price were to pull back to retest the resistance now turned support, the buyers should step in with a defined risk below it to position for a rally into the $89 level. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the lower bound of the channel around the $78 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we can find some more confluence around the $83 support as we can find the red 21 moving average and the 38.2% Fibonacci retracement level. If the price were to extend the pullback though, the buyers will have the trendline and the 61.8% Fibonacci retracement level as the last line of defence. Below the trendline, the sellers will regain control and we could see a selloff back into the $78 level.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should signal a pullback into the minor trendline where we can also find the 38.2% Fibonacci retracement level for confluence. All these setups will be dip-buying opportunities for the buyers but depending on the strength of the momentum and the economic data, the price might bounce from either level. For this reason, the buyers might want to split their orders or wait for a catalyst to pile in.
Upcoming Events
Today we have the US ADP and the US ISM Services PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we conclude the week with the US NFP report. Weak data is likely to weigh on Crude Oil in the short term, while strong figures should give it a boost.
