Crude oil has been
on a steady downtrend since the end of the retaliations between Iran and Israel
that eventually marked the top in the geopolitical risk premium. The selloff continued
as we got some noise from the cease-fire negotiations between Israel and Hamas.
More recently, we started to get news about speculations that OPEC+ could
extend the voluntary output cuts into year end. The group meets on June 1st.
Crude Oil Technical
Analysis – Daily Timeframe
Crude Oil Daily
On the daily
chart, we can see that crude oil fell below the trendline yesterday but
eventually rallied back above it leaving behind a hammer candlestick pattern. We
have a resistance
zone around the $81 level where we might find the sellers stepping in with a
defined risk above the resistance to position for a break below the trendline
with a better risk to reward setup. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the $85 level.
Crude Oil
Technical Analysis – 1 hour Timeframe
Crude Oil 1 hour
On the 1 hour chart,
we can see more clearly the resistance zone with a downward trendline adding
some extra confluence. If we get a pullback into the upward trendline around
the $78.50 level, we can expect the buyers to step back in with a better risk
to reward setup to target the break above the $81 resistance.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures while tomorrow
we conclude the week with the University of Michigan consumer sentiment survey.
It’s unlikely that we will see major changes to the market’s expectations
though, so the next big event to watch will be the US CPI next week.