Crude Oil sold off recently on expectations of a ceasefire in Gaza although the market might have overacted to the news given that Israel said that it won’t support a full ceasefire. The tensions in the Red Sea are still present and Houthis militants said that they will escalate further until the attacks on Gaza won’t stop.
On the demand side, the recent economic data has been showing a reacceleration in activity which is supported by the rate cuts expectations. On top of that, the PBoC recently decided to cut its Reserve Requirement Ratio by 50 bps and there are expectations for more easing measures to follow given the rout in the Chinese stock market.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that Crude Oil sold off into the trendline around the $72 level and bounced following strong US data. The buyers stepped in with a defined risk below the trendline to position for a rally into the $80 resistance. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the $64 support.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another trendline which should be the first target for the buyers and a break above it should see them increasing the bullish bets into the $80 resistance. The sellers, on the other hand, will likely lean on the trendline with a defined risk above it to position for a drop into the major trendline and target a break below it.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg lower below the trendline diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we saw a reversal given that the price broke above the most recent swing high level and extended to the upside. The price is now at a support zone around the $73.25 level where we have also the red 21 moving average for confluence. This is where the buyers are likely to step in to target the downward trendline. The sellers, on the other hand, will want to see the price breaking lower to target a drop into the major upward trendline.
Upcoming Events
This week is basically empty on the data front with just the latest US Jobless Claims figures tomorrow being the only notable release. Strong data should support the market while weak figures are likely to weigh in the short term.
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