Crude Oil broke through the key $83 resistance following the strong US ISM Manufacturing PMI last week and pulled back at the start of this week as we haven’t seen any escalation between Israel and Iran and we even got talks of a possible ceasefire between Israel and Hamas. For now, the fundamentals support more upside for Crude Oil as we are seeing a reacceleration in economic activity and the pickup in China’s performance seems to be gathering steam.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil broke the upper bound of the rising channel and extended the rally into the $87.50 level. This breakout should point to further gains ahead with the $90 level as the next target. The price pulled back to retest the broken channel recently and we can expect the buyers to step in around these levels to position for another rally into new highs. The sellers, on the other hand, will want to see the price falling back below the key $83 support to position for a drop back into the lower bound of the channel.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the $83 support where we can find the confluence of the daily red 21 moving average, the upward trendline and the 61.8% Fibonacci retracement level. The buyers though are already using the 38.2% Fibonacci retracement level as support to position for new highs, but if the price were to break below it, we can expect them to pile in around the $83 support.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action after the breakout of the channel diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should signal a pullback into the trendline, although the price found strong support around the 38.2% Fibonacci retracement level. We got stuck in a consolidation between the Fibonacci level and the black counter-trendline. A break to the upside should see the buyers increase the bullish bets and extending the rally into new highs. On the other hand, a break to the downside will see the sellers piling in to position for a break below the $83 support with a better risk to reward setup.
Upcoming Events
Today we get the US CPI report and the FOMC Minutes. Tomorrow, we will have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment Survey.
