On the daily chart below, we can
see that soon after the flash crash into the $64 level, the price of crude oil
rebounded strongly and has rallied back to the $73 support now turned resistance. We can
see that the first breakout attempt failed, and the price moved lower into the
$70 level. Since then, we started to get some positive news though.
The big miss in Jobless Claims
wasn’t as bad as it seemed because there were fraud attempts in Massachusetts,
the US announced that it will start to buy up to 3
million barrels for the SPR and the US
retail sales beat expectations. The price is now hovering
around the $73 resistance where there’s also the red long period moving
average as an extra barrier. If we start to see the price breaking higher, it’s
likely that the bullish momentum will increase, and the buyers may extend the
rally towards the previous high at $83.
On the 4 hour chart below, we can
see more closely the price action around the $73 resistance and we can also see
that there’s a 50% Fibonacci
retracement level for further confluence. So, this is a strong resistance
area, and a breakout can lead to a fast move afterwards. Today, we have the US Jobless Claims
where the previous number is expected to be revised lower. The data is
important and big deviations from the expected number should be market moving.
A big miss should be negative for the crude oil market, while a beat may push
the price above the resistance.
On the 1 hour chart below, we can
see the short-term levels that traders should be focused on. On the upside, a
breakout of the $73.50 high and 50% Fibonacci retracement level, especially if
supported by a fundamental catalyst, should lead to a big rally. On the
downside, a break below the recent resistance at $71.80, should lead to lower
prices into the next swing low at $70. If the sellers break below the $70 level
as well, then we may see a return to the $64 low.