Crude Oil prices remained
supported in the past three weeks as the geopolitical risk in the Middle East
stayed high around the Israel-Hamas war and possibility of a larger conflict
comprising other Arab countries, especially Iran. The market is now looking
past the conflict as the we haven’t seen any larger escalation even after the
Israel ground offensive in Gaza. The risk is still there, but Crude Oil prices
might now be more sensitive to growth fears as the surge in the last quarter
may have increased the risk of a recession.
WTI Crude Oil
Technical Analysis – Daily Timeframe
WTI Crude Oil Daily
On the daily chart, we can see that Crude Oil
erased all the gains from the outbreak of the Israel-Hamas war as the market is
starting to look past the conflict given that we haven’t got any bigger
escalation with Iran. The break below the key support around
the $83 level is significant and it raises the odds of a bigger drop into the
$78 level where we can find the previous swing low and the 127.2% Fibonacci extension level
for confluence.
WTI Crude Oil Technical
Analysis – 4 hour Timeframe
WTI Crude Oil 4 hour
On the 4 hour chart, we can see that from a risk
management perspective, the sellers will be better off waiting for the price to
pull back into the downward trendline where we
can find also the red 21 moving average and the Fibonacci retracement levels
for confluence. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and increase the bullish bets
into the $90 level.
WTI Crude Oil
Technical Analysis – 1 hour Timeframe
WTI Crude Oil 1 hour
On the 1 hour chart, we can see that the
latest leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might either get a pullback into the minor
trendline or into the major one. The sellers may want to split their orders as
both the resistances could work out. The buyers, on the other hand, will keep
on piling in at every breakout.
Upcoming Events
This week, we will get lots of tier one data points with
the US labour market and the FOMC decision in focus. Today we will get the US
ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate
decision. Tomorrow, we will see the US Jobless Claims data, while on Friday we
conclude the week with the US NFP report and the ISM Services PMI. Weak data is
likely to weigh on Crude Oil as recessionary fears will come back.