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9 July 2024 | FXGT.com

Oil Prices Slip Below Key Support After Five-Week Rally, Focus Turns to $80 Target Level

  • Rally since June 4th: Oil futures have experienced a significant rally since the June 4th low of $72.55. Over the last five weeks, there has been a steady increase in bullish pressure, marked by consistent higher highs and higher lows on the 4-hour chart, concluding in a new high reached last Friday at $84.50.
  • Breakout Below $82.50: Monday’s price action brought a significant development as crude oil broke below key 4-hour support level at $82.50, signaling the potential formation of a daily top. This shift occurs against the backdrop of ongoing discussions to end the Gaza conflict, with the market reacting to the potential reduction in geopolitical risks.
  • Bearish Reversal: The critical break below the 4-hour support level at $82.50, a level that had held over the past week, came after two failed attempts to surpass $84.50 last week, resulting in a double top formation. This break below $82.50 confirms a bearish pattern, opening the way for a medium-term top on the daily timeframe.
  • Key Levels: Although Monday’s break led to lower prices, the market is being contained by yesterday’s low at $82 and a short-term correction high at $82.90. A break below $82 would confirm a continued downward trend, targeting the support area at the key daily 45 moving average channel, just above the psychological level of $80, with an extended target at the lower boundaries of the daily channel at $78.
  • Short-term Momentum: Short-term momentum is considered bearish while below the $83 pivot level. Only a break above $83 would negate the bearish scenario, shifting sentiment to a sideways range within the past week’s levels and possibly triggering a move back to the previous highs of $84.50.
  • Upcoming Economic Data: While geopolitical tensions remain subdued, an extended correction appears to be the primary scenario. Key upcoming data for the US includes the CPI inflation data on Thursday, followed by the Producer Price Index on Friday.

US Oil 4Hour Chart

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