WTI Crude Oil Technical Analysis

Crude Oil recently broke
through the key $83 resistance following the strong US ISM Manufacturing PMI and some geopolitical risk in the
Middle East after Israel killed an Iranian general. For now, the fundamentals support
more upside for Crude Oil as we are seeing a reacceleration in economic
activity and the pickup in China’s performance seems to be gathering steam.

WTI Crude Oil Technical
Analysis – Daily Timeframe

On the daily chart, we can see that Crude Oil broke
through the key $83 resistance where we
had also the upper bound of the channel as an extra barrier. This breakout
should point to further gains ahead with the $89 level as the next target. If
the price were to pull back to retest the resistance now turned support, the
buyers should step in with a defined risk below it to position for a rally into
the $89 level. 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
lower bound of the channel around the $78 level.

WTI Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we can find
some more confluence around
the $83 support as we can find the red 21 moving average and the
38.2% Fibonacci retracement level.
If the price were to extend the pullback though, the buyers will have the trendline and the
61.8% Fibonacci retracement level as the last line of defence. Below the
trendline, the sellers will regain control and we could see a selloff back into
the $78 level.

WTI Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it should signal a pullback into the minor trendline
where we can also find the 38.2% Fibonacci retracement level for confluence.
All these setups will be dip-buying opportunities for the buyers but depending
on the strength of the momentum and the economic data, the price might bounce
from either level. For this reason, the buyers might want to split their orders
or wait for a catalyst to pile in.

Upcoming Events

Today we have the US ADP and the US ISM Services
PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we
conclude the week with the US NFP report. Weak data is likely to weigh on Crude
Oil in the short term, while strong figures should give it a boost.

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

Go to Forexlive

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