Crude Oil has been rallying strongly in the past month as the prospects of more economic stimulus from China, the resilience of other advanced economies and the production cuts gave the black gold a tailwind to reach the $83 level. In fact, recently we got a promise from Chinese authorities that they will step policy support for the economy and last week Saudi Arabia announced that they will extend their voluntary production cut through September which can be extended further or even deepened. The price now stands at a key resistance level and the technicals may help to catch the next major move.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that after breaking the trendline, Crude Oil rallied all the way up to the key $83 resistance. This is where we should expect the sellers to step in with a defined risk above the level to target the lows. The buyers, on the other hand, will want to see the price breaking higher to pile in and start targeting the next resistance at $93.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong trendline that acted as support for the buyers in many occasions. In fact, just yesterday after the selloff following the bleak Chinese imports data, Crude Oil rebounded strongly right from the trendline back to the resistance. This may even turn into an ascending triangle pattern and a breakout generally leads to big moves.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that this is now a waiting game until we get a breakout. The buyers will want to see a break to the upside, although there’s also the risk of a fakeout on the first try. The sellers, on the other hand, will want to see a break below the trendline to pile in and target the lows.
Upcoming Events
This week the main events will be the US CPI and Jobless Claims reports tomorrow. For the US CPI, the market is likely to focus more on the Core readings as this is what the Fed is more interested in. Higher than expected data may lead to a risk off sentiment as the market should start to price in a more hawkish Fed and it might weigh on Crude Oil as well. On the other hand, lower than expected readings may lead to a risk on sentiment due to the soft-landing narrative and no more rate hikes. At the same time of the US CPI data, we will also see the latest US Jobless Claims report, which might have an even bigger effect if the data shows a big surprise. In fact, a miss may cause recessionary fears and lead to a selloff in Crude Oil, while a beat may be taken as good news in the short term as the resilience in the labour market can sustain overall demand.
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