Fundamental
Overview
Crude oil continues to
remain supported as the buyers might be looking forward to the consequences of the Fed’s easing
cycle on economic activity. As a reminder, the positioning in crude oil is at record lows and the
sentiment is very bearish.
These factors can generally
offer great contrarian opportunities. The main reason which could drive oil
prices higher is the Fed easing into a resilient economy. Lower rates
generally lead to an increase in the manufacturing activity and therefore
increased demand for crude oil.
On Monday, we get the S&P
Global PMIs and that will be the first test although the data might not
incorporate the Fed’s decision, so the ISM Manufacturing PMI in the first week
of October might be a better gauge.
Crude Oil
Technical Analysis – Daily Timeframe
Crude Oil Daily
On the daily chart, we can
see that crude oil rejected the key 71.67 resistance but eventually came back to retest
it. The buyers will need the price to break above the resistance to start
targeting the major trendline around the 76 handle. The sellers,
on the other hand, will likely step in again with a defined risk above the
resistance to position for a drop into the 65 handle.
Crude Oil Technical
Analysis – 4 hour Timeframe
Crude Oil 4 hour
On the 4 hour chart, we can
see more clearly the recent rejection from the resistance and the bounce on the
support zone around the 68.50 level. There’s not much else we can glean from
this timeframe, so we need to zoom in to see some more details.
Crude Oil Technical
Analysis – 1 hour Timeframe
Crude Oil 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum
on this timeframe. If we get a pullback into the trendline, we can expect the
buyers to lean on it to position for a rally into the major trendline.
The sellers,
on the other hand, will want to see the price breaking lower to increase the
bearish bets into the 65 handle. The red lines define the average daily range for today.
