Crude Oil continues to sell off as the bearish reasons keep on accumulating. In fact, the bulls switched from fearing undersupply to now looking at oversupply as demand continues to weaken and will likely slow even more in 2024 as the major economies could enter in recessions due to tight monetary policies. The latest OPEC+ cuts were taken as a big disappointment and with the US production at record levels, there are very little reasons to be bullish on Crude Oil.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil continued to sell off since the last notable pullback into the 38.2% Fibonacci retracement level and the trendline around the $79 level. The price recently broke below the swing low, retested it and continued lower as the sellers keep targeting the cycle lows around the $64 level. The bias remains strongly bearish on this timeframe, so the sellers will keep on stepping in at every notable resistance to ultimately targeting new lows.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that this latest leg lower is diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. We can also notice that this formation resembles the one from November when we got the pullback into the swing high and then the big selloff. If that’s the case, we can expect the sellers to pile in around the swing high at $72 to position for another drop into the cycle low at $64 with a great risk to reward setup.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price yesterday broke below the swing low, retested it and then continued lower. The price is now coming back into the swing low level, and we can expect some aggressive sellers to step in once again with the red 21 moving average acting as dynamic resistance. If the price breaks higher though, the buyers are likely to pile in and position for a rally into the resistance at $72 where we will find once again strong sellers.
Upcoming Events
Today, we have the US PPI data followed by the FOMC rate decision where the Fed is expected to keep interest rates unchanged. Tomorrow, we will see the latest US Retail Sales and Jobless Claims figures, while on Friday we conclude the week with the US PMIs. Strong data might support Crude Oil in the short term, while weak figures could weigh on it further.
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