WTI Crude Oil Technical Analysis

Crude Oil fell to a 3-month
low as the market focus switched from the geopolitical risk in the Middle East
to the macro risk of a recession as the PMIs of major economies continue to
contract and the US labour market data started to show more clear weakness. If
we don’t get any bigger escalation in the Middle East that could threaten to
disrupt supply, Crude Oil is likely to reach even lower price as while the
global economy continues to weaken.

WTI Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can see that Crude Oil fell
back into the range between the $83 resistance and $64
support. The bias has turned bearish again following this technical break below
the $83 level and the weakening US labour market data. The price is now around
the swing level at $78 and from a risk management perspective, the sellers
would have a much better risk to reward setup if the price pulled back into the
resistance where we can find the confluence with the
trendline, the red
21 moving average and the
50% Fibonacci retracement level.

WTI Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that Crude Oil has
been selling off with almost no pullback since Monday. The buyers are likely to
step in around this swing level to target a pullback into the minor trendline
around $80 level where we can also find the 50% Fibonacci retracement level and
the red 21 moving average for confluence. That’s where the sellers are likely
to pile in with a defined risk above the trendline to position for a drop below
the $78 level with a better risk to reward setup.

WTI Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have another minor trendline defining the current bearish momentum. A break
above this trendline should trigger more buying pressure and probably lead to
the pullback into the $80 level. The sellers might even lean on this trendline
with the red 21 moving average for confluence, but the risk to reward would be
much worse.

Upcoming Events

This week is pretty empty on the data front with just
the US Jobless Claims tomorrow and the University of Michigan Consumer
Sentiment on Friday being the only notable events. The market is likely to
focus on the US Jobless Claims given the recent weakness in the labour market
data. Strong readings are likely to support Crude Oil, while weak figures may
add even more pressure as the recessionary trade is likely to gather steam.

This article was written by FL Contributors at www.forexlive.com.

Go to Forexlive

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