FUNDAMENTAL
OVERVIEW
Crude oil opened the week with a negative gap following
some positive developments over the weekend. The US halted its strikes after 13
days of attacks and Iran said it will maintain a ceasefire so long as the US
remains on pause.
This has led to some optimism as traders took this latest
development as an early sign of a potential de-escalation. It goes without saying
that the price action will continue to be driven by US-Iran headlines.
Oil prices will likely remain under pressure amid the
de-escalation expectations, but traders will keep a close eye on the headlines
as things can re-escalate quickly with just a single Trump’s post.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that crude oil broke out of the major downward trendline last week but couldn’t
sustain the breakout following positive developments on the US-Iran front. The
sellers piled in as the price fell back below the trendline and will target the
support zone around the 78.00 handle.
If the price gets there, we
can expect the buyers to step in with a defined risk below the support to
position for a rally into new highs. The sellers, on the other hand, will look
for a break to extend the drop into the 68.00 support next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke below the upward trendline that was defining the bullish
momentum flipping the near-term outlook to the downside. There’s not much we
can glean from this timeframe, so we need to zoom in to see some more details.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have
a minor downward trendline now defining the bearish move. The confluence with
the broken upward trendline, the major downward trendline and the gap should
act as a strong resistance zone.
If we get a pullback into
the resistance, we can expect the sellers to step in with a defined risk above
the minor downward trendline to keep pushing into the 78.00 support. The
buyers, on the other hand, will look for a break above the minor downward trendline
to pile in for a rally into new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow, we get the US Consumer
Confidence report. On Wednesday, we have the FOMC rate decision. On Thursday,
we get the US PCE price index, the Advance Q2 GDP and the Jobless Claims
figures. On Friday, we conclude the week with the US Q2 Employment Cost Index. Keep in mind that the price action will continue to be driven by US-Iran headlines.
This article was written by Giuseppe Dellamotta at investinglive.com.