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Crude Oil Technical Analysis – We are at a Key Resistance

Fundamental Overview

Crude oil has been falling steadily since reaching $87.50 following mutual retaliation between Iran and Israel. This drop has been something of a headache, however, as there are expectations for global growth amid easing policies from China and other major central banks, improving PMIs and extended cuts OPEC+ production volunteers until the end of the year.

The death of Iranian President Raisi does not change anything for the market since, quoting the supreme leader, Ayatollah Ali Khamenei, “there will be no disruption in the country’s affairs”. Overall, crude oil is still trading in the 70-90 range, so nothing exciting is happening, but in the near term it should remain supported barring a latent slowdown in demand.

Crude Oil Technical Analysis – Daily Timeline

Crude oil per day

On the daily chart, we can see that crude oil moved below the trendline several times, but failed to extend its fall to new lows. The market has been stuck in a consolidation just below the key $80 level and we will likely need a catalyst to get things going again.

Crude Oil Technical Analysis – 4 Hour Time Frame

Crude oil 4 hours

On the 4-hour chart we can see the key resistance area around the $80 level more clearly and we can also see that we have a downtrend line adding further confluence to the barrier. This is where sellers continue to step in with defined risk above resistance to position themselves for a fall to new lows. Buyers, on the other hand, will need a breakout higher to start targeting an extension to the $84.50 level next.

Crude Oil Technical Analysis – 1 Hour Time Frame

Crude oil 1 hour

On the hourly chart, we can see that price action in a range does not offer many trading opportunities. From a risk management perspective, the best place for sellers to go short is around resistance, while buyers may want to wait for support around the $77 level. Nonetheless, a breakout higher is likely to increase the bullish momentum and trigger a rally up to the $84.50 level.

Upcoming catalysts

This week is rather empty on the data front, with the only highlight being Thursday’s US PMIs, where weak data could weigh on crude oil while strong numbers could give it a boost.


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