Crude Oil continues to hover near the highs as the supply tightness remains at the centre of the market’s focus at the moment. In fact, Saudi Arabia and Russia are sticking with their production cuts and the resilience in the global economy is supporting higher oil prices. The bearish case is that the bullish sentiment in the market is getting stretched with many participants starting to call much higher prices ahead, but such high prices are likely to weigh on demand even more eventually leading to a drop.
WTI Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that after the breakout of the key resistance around the $83 level, Crude Oil just kept on rallying with almost no pullback towards the next resistance around the $93 level. The price recently pulled back into the red 21 moving average where the buyers stepped in again targeting another push into the $93 resistance. The sellers are likely to pile in around the resistance with a defined risk above it to position for the top and much lower prices next.
WTI Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that Crude Oil is diverging with the MACD right as it trades into the key $93 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got the first pullback into the support around the $88 level where the buyers piled in with a defined risk below it to target another rally into the $93 resistance. This push might be the last one as the divergence will be much stronger at that point and such high prices are starting to weigh on demand.
WTI Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the strong rally from the $88 support and the break above the trendline around the $90.50 level. The buyers might want to wait for a pullback into the $90.50 level where we have the confluence with the broken trendline and the 38.2% Fibonacci retracement level and the red 21 moving average to increase the longs into the $93 resistance. The sellers, on the other hand, will want to see the price falling back below the trendline to pile in and target the break below the $88 support.
Upcoming Events
This week is pretty bare on the data front and the only report that might weigh on Crude Oil looks to be the US Jobless Claims tomorrow. Strong readings are likely to keep Crude Oil supported in the short term, while weak figures might weigh on sentiment and demand outlook and drag Crude Oil prices down.
See also the video below
