Crude Oil rallied into the final week of last December following the Fed pivot and the attacks in the Red Sea as the market got worried about another inflationary impulse due to more demand from easing financial conditions and supply disruptions. Such fears abated with the US launching a multinational task force to safeguard the Red Sea commerce. Last week, Crude Oil erased all the gains from the Fed pivot as the market continues to focus on the demand side and the risk of a recession in 2024. Yesterday, the price bounced after Libya’s largest oil field halted production due to protests. This is unlikely to cause a major rally though, so the focus will remain on the economic data and the Red Sea situation.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil recently sold off into the $69 level erasing all the gains from the Fed pivot. The price bounced yesterday and it’s now back to the key trendline. This is where we can expect the sellers to step in once again with a defined risk above the trendline to position for a drop into the $64 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and start targeting the $80 level.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that besides the trendline, we can also find the confluence with the 61.8% Fibonacci retracement level. This makes this resistance zone even more important as a break to the upside would be a signal that the buying momentum is strong, and it’s more likely that we see a rally into the $80 level before finding strong sellers again.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and we can notice that the momentum has been slowing. In fact, the upswings became weaker and there’s some divergence with the MACD. This is another bearish confluence for the sellers and a break below the $72.80 level should give them even more conviction for another selloff.
Upcoming Events
Today we will have another slate of US labour market data with the release of the US ADP and Jobless Claims figures. Tomorrow, we conclude the week with the NFP report and the ISM Services PMI. Weak data is likely to weigh on Crude Oil due to lower future demand fears while strong data should keep the market supported.
See the video below
