Fundamental Overview

Crude oil has been falling steadily since topping around the $87.50 level following the mutual retaliations between Iran and Israel. The drop has been kind of a head-scratcher as the market didn’t respond positively to the global growth expectations amid China and other major central banks policy easing, improving PMIs and OPEC+ extending the voluntary production cuts until the end of the year.

More recently though, crude oil finally caught a sustained bid triggered by the strong US PMIs last week and added to the gains yesterday following the strong US Consumer Confidence report. Looking ahead, positive growth and sentiment should be tailwinds for the market, but we will need to crack a strong resistance first to gain some more conviction.

Crude Oil Technical Analysis – Daily Timeframe

Crude Oil Technical Analysis
Crude Oil Daily

On the daily chart, we can see that crude oil recently bounced around the bottom of the 80-76 range and extended the rally following the break of the trendline. The price is now trading right at the key 80-81 resistance.

This is where the sellers will likely step in with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.

Crude Oil Technical Analysis – 4 hour Timeframe

Crude Oil Technical Analysis
Crude Oil 4 hour

On the 4 hour chart, we can see more clearly the resistance with the 38.2% Fibonacci retracement level adding some extra confluence. The price has been ranging between the 80 resistance and the 77 support and it will be interesting to see if the recent data will be enough to trigger a breakout to the upside or we keep trading inside this range.

Crude Oil Technical Analysis – 1 hour Timeframe

Crude Oil Technical Analysis
Crude Oil 1 hour

On the 1 hour chart, we can see that if this strong bullish momentum remains intact, the first support for the buyers will be the steep trendline around the 80 level. A break below this level should provide for a correction into the 38.2% Fibonacci retracement level around the 79 level where we can also find the lower limit of the average daily range. The sellers will likely increase the bearish bets on a break below the trendline and target a drop back into the 77 support.

Upcoming Catalysts

Tomorrow we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the Chinese PMIs and the US PCE report. Note that the OPEC+ meeting will be held on Sunday June 2nd where the group is expected to extend the voluntary output cuts.