On the daily chart below for XTIUSD, we can see that the price is now threatening a major breakout of the range. The market has been stuck in this range since December 2022. We got a breakdown in mid-March as the market feared an immediate recession due to the little banking crisis after the Silicon Valley Bank collapse.
As the Fed backstopped the crisis with emergency lending tools and the fear faded, the price rebounded and came back into the range. Then we got a surprise OPEC+ production cut the last week that made the market to gap up and open $6 higher than the previous close. That gap hasn’t been filled yet and the market kept on bidding with the price now at the top of the range.
XTIUSD technical analysis
On the 4 hour chart below, we can see more closely the price action and the gap created by the OPEC+ news. It’s also worth noting that the latest push to the upside is diverging with the MACD. This may be a sign that the momentum isn’t really there, and it may turn into a fakeout.
Today we have the US Jobless Claims report and the market may go into risk-off if the data miss again expectations signalling that the labour market may be finally weakening. This should be bearish for oil as the market will look at lower demand ahead. If the data beats expectations, then we may see a real breakout and oil may reach the $90 handle.
On the 1 hour chart below, we can see how the price is about to break yesterday’s high. The buyers may want to wait for the economic data to confirm the breakout and pile in aggressively. The sellers, on the other hand, will want to see worse economic data and a further confirmation from the technicals, where a break below the trendline would end the strong bullish momentum and bring the price down to fill the gap.
