Crude Oil prices remained supported in the past two 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. We’ve been seeing a clear pattern of large rallies into the weekends as the market feared escalations given the Israel’s intention of a ground offensive in Gaza. Once again, we haven’t got any ground operation and we have even seen some hostages being released. This has led to a quick erase of the geopolitical risk premium seen in the past two weeks. Nevertheless, the Middle East will remain a focal point for now.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil found resistance around the trendline, the red 21 moving average and the 50% Fibonacci retracement level, but eventually faked out the buyers as the price spiked higher into the 61.8% Fibonacci retracement level before erasing all the gains of the past two weeks.
The price is now back at the key support around the $83 level where we can expect the buyers to step in again with a defined risk below the level to position for another rally into the highs. The sellers, on the other hand, will want to see a break to the downside to invalidate the bullish setup and start targeting the lows around the $65 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have what could turn out to be a bear flag if the price continues lower and breaks below the key support. At the moment, it’s hard to envision such a scenario given the high geopolitical risk around the Israel-Hamas war but there’s also global growth to worry about and the recent data suggest that there’s weakness creeping in slowly.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off waiting for the price to pull back into the trendline where they will also find the confluence with the red 21 moving average and the Fibonacci retracement levels. A break above the trendline should invalidate the bearish setup and trigger more bullish bets from the buyers leading to a rally back to the $88 price area.
Upcoming Events
Tomorrow we will see the latest US Jobless Claims data with the market likely focusing on the Continuing Claims figures as they’ve missed expectations two times in a row already and might be a signal that the labour market is weakening. On Friday, we will get the US PCE report which is unlikely to change anything for the near-term policy outlook.
