Crude Oil fell to a 3-month low as the market focus switched from the geopolitical risk in the Middle East to the macro risk of a recession as the PMIs of major economies continue to contract and the US labour market data started to show more clear weakness. If we don’t get any bigger escalation in the Middle East that could threaten to disrupt supply, Crude Oil is likely to reach even lower price as while the global economy continues to weaken.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil fell back into the range between the $83 resistance and $64 support. The bias has turned bearish again following this technical break below the $83 level and the weakening US labour market data. The price is now around the swing level at $78 and from a risk management perspective, the sellers would have a much better risk to reward setup if the price pulled back into the resistance where we can find the confluence with the trendline, the red 21 moving average and the 50% Fibonacci retracement level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Crude Oil has been selling off with almost no pullback since Monday. The buyers are likely to step in around this swing level to target a pullback into the minor trendline around $80 level where we can also find the 50% Fibonacci retracement level and the red 21 moving average for confluence. That’s where the sellers are likely to pile in with a defined risk above the trendline to position for a drop below the $78 level with a better risk to reward setup.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor trendline defining the current bearish momentum. A break above this trendline should trigger more buying pressure and probably lead to the pullback into the $80 level. The sellers might even lean on this trendline with the red 21 moving average for confluence, but the risk to reward would be much worse.
This week is pretty empty on the data front with just the US Jobless Claims tomorrow and the University of Michigan Consumer Sentiment on Friday being the only notable events. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Strong readings are likely to support Crude Oil, while weak figures may add even more pressure as the recessionary trade is likely to gather steam.