The OPEC+ production cuts and the expectations of more economic stimulus in China, gave Crude Oil enough strength to break above the key resistance zone around the $75 level. After a brief rally, the price stalled and reversed as the PBoC held off from delivering more rate cuts. Last week though, China has promised more stimulus, giving another boost to Crude Oil that led to a rally towards the $83 resistance. The manufacturing sector remains in recession for most advanced economies and this week we saw the Chinese Manufacturing PMI falling back into contraction for the first time in three months. Overall, there are still lots of headwinds for Crude Oil with the long-term bias remaining bearish.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil has eventually reached the resistance zone near the $83 level where strong sellers stepped in with a defined risk above the level to target another selloff into the lows. There’s a good support level at $77.29 where we can find the previous swing high level, the 61.8% Fibonacci retracement level and the red 21 moving average for confluence. This is where the buyers are likely to pile in to target again the resistance and ultimately a breakout.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the selloff from the resistance yesterday has led to a break below a key trendline. The price pulled back a little soon after to retest the trendline and got rejected again. The moving averages have also crossed to the downside confirming the change in the sentiment, so we should see more sellers piling in here targeting the $77.29 support.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, depending on the price action, we can see that the sellers will have two different options where to sell from:
- If the price rallies from here, the sellers are likely to lean on the previous swing low support now turned resistance where we can also find the 38.2% Fibonacci retracement level and the red 21 moving average.
- Alternatively, if the price continues to fall and breaks below the recent low at $79.00, the sellers should jump onboard and ride the selloff into the $77.29 support.
The buyers, on the other hand, will need the price to rise above the $80.62 swing point to confirm the change in the bias and start positioning for more upside.
Upcoming Events
Today we have the US Jobless Claims and the ISM Services PMI, while tomorrow it will be the time for the main event of the week: the US NFP report. If the data is benign, we should see Crude Oil climbing up as the soft-landing narrative expectations would strengthen. If the data is bad though, we are likely to see a selloff as recessionary fears should spill over the markets. Moreover, if the data is too strong, the market may expect a more hawkish Fed and eventually lead to a fall in Crude Oil due to headwinds like higher rates, higher US Dollar and risk off sentiment.
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