Basic overview
The price of crude oil has declined steadily since it reached the $87.50 level following tit-for-tat reprisals between Iran and Israel. The decline came as a surprise as the market did not respond favorably to global growth expectations amid policy easing by China and other major central banks, improving PMIs and OPEC+ extending voluntary production cuts until the end of the year.
More recently, crude oil finally found a sustained showing driven by strong US PMIs last week, adding to yesterday's gains following the release of a strong US consumer confidence report. Looking ahead, positive growth and sentiment should be a tailwind for the market, but we will need to break strong resistance first to gain further conviction.
Technical analysis of crude oil – daily time frame
Crude oil daily
On the daily chart, we can see that crude oil recently bounced around the bottom of the 80-76 range and extended its rally after breaking the trend line. The price is now trading at the major resistance level 80-81.
This is where sellers are likely to step in with specific risks above the resistance level to fall to new lows. On the other hand, buyers will want to see the price rise higher to increase bullish bets to new highs.
Technical analysis of crude oil – 4-hour time frame
Crude oil 4 hours
On the 4-hour chart, we can more clearly see the resistance level with the 38.2% Fibonacci retracement level adding some additional confluence. The price ranges between the resistance level of 80 and the support of 77, and it will be interesting to see whether the latest data will be enough to stimulate a breakout to the upside or whether we will continue trading within this range.
Technical analysis of crude oil – 1 hour time frame
Crude oil 1 hour
On the hourly chart, we can see that if this strong bullish momentum remains intact, the first support for buyers will be the sharp trend line around the 80 level. A break below this level would provide a correction to the 38.2% Fibonacci retracement level around the 79 level where we can Also find the lower end of the average daily range. Sellers are likely to increase their bearish bets on a break below the trend line and target a decline back to the 77 support level.
Upcoming stimuli
Tomorrow we will see the latest US unemployment claims numbers. On Friday, we conclude the week with the release of China's PMIs and the US Personal Consumption Expenditures report. Note that the OPEC+ meeting will be held on Sunday, June 2Second abbreviation The group is expected to extend the voluntary production cuts.