Crude Oil has been selling off pretty heavily since the market switched its focus from the Hamas-Israel conflict to the deteriorating economic data in the major economies. In fact, on a forward-looking basis, the demand side is starting to look bleaker with the PMIs contracting further and the US labour market now showing clearer signs of weakness.
The last week, Crude Oil started to rally as we got the news from OPEC+ sources that the group would consider whether to deepen supply cuts. This is probably leading to a classic “buy the rumour, sell the fact” trade with Oil prices rallying into the meeting with the risk of a selloff on both a disappointment and a confirmation of the cuts, unless of course they are very big.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil bounced around the $72.50 level and erased almost all the losses of the selloff from the $80.00 level. The bias remains bearish as the price has been printing lower lows and lower highs with the moving averages being crossed to the downside. We can expect the sellers to pile in around the $80.00 level again as they will also have the 38.2% Fibonacci retracement level and the red 21 moving average for confluence.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 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, the break above the minor trendline suggests that we might get a reversal all the way up to the major trendline around the $82.00 level, but the buyers will first need to break above the resistance around the $80.00 level before eyeing the major trendline.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been consolidating around the $77.70 level for the first part of the week but we can expect more upside into the OPEC meeting early next week. A rally into the $80.00 level is likely to lead to a divergence with the MACD, so what happens at that resistance will be key.
Upcoming Events
Today we will get the latest US Jobless Claims report which is probably going to be the most important release of the week. Tomorrow, the US will be on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. On Friday, we conclude the week with the latest US PMIs. Weak US data is likely to weigh on Crude Oil as the market might be bringing the expectations for a recession forward. On the other hand, strong data might support the market in the short term.
