Basic Overview
Crude oil prices fell sharply in the latter half of last week as some very weak US data came out, first the ISM manufacturing PMI and then the non-farm payrolls report. The market eventually rebounded on Monday and extended its gains yesterday, with the appointment of a new Hamas leader seen as more hawkish as a potential catalyst.
This comes on the heels of the assassination of former Hamas leader Ismail Haniyeh in Iran, an attack blamed on Israel. Tensions in the Middle East remain high as the world awaits Iran’s retaliation and fears a wider escalation. This makes the supply side of the equation uncertain and raises the geopolitical risk premium.
Crude Oil Technical Analysis – Daily Time Frame
Crude oil daily
On the daily chart, we can see that crude oil fell to a low of 72.50 where we saw a bounce on Monday and then a stronger rally on Wednesday. Sellers will want to see the price break the 72.50 level to increase bearish bets towards the 65.00 price area.
On the other hand, buyers will be looking for a fresh rally to the 80.00 level although we will need some major breaks on the lower time frames to gain momentum.
Crude Oil Technical Analysis – 4 Hour Time Frame
Crude oil 4 hours
On the 4-hour chart, we can see that yesterday the price broke a minor resistance level around the 74.50 level and extended the rise to the 76.00 level. The price is now pulling back to retest the level and here we can expect buyers to step in with a defined risk below the level to position above the major trend line.
On the other hand, sellers will want to see the price break below the level to increase bearish bets towards the 72.50 level targeting a break below it.
Crude Oil Technical Analysis – 1 Hour Time Frame
Crude oil for an hour
On the 1-hour chart, we can see that we also have the 38.2% Fibonacci retracement level adding confluence to the support area around 74.50. If the price rises to the major trend line, we can expect sellers to rely on it to position a move back to the lows with a better risk-reward setup. The red lines mark the average daily range for the day.
Upcoming incentives
Today we will get the latest US unemployment claims numbers which is likely to be a strong market moving release given the market’s focus on the labor market. The market will also be paying close attention to comments from Fed members as Fed Chairman Barkin is scheduled to speak later today.
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