US Oil Faces Key Support Retest at $81 Amid China Demand Concerns
Oil Rally Stalls: The recent two-month oil rally encountered significant resistance at $85 in early July before retracing to find support at $81. A double top formation on the 4-hour chart indicated a potential top pattern on the daily timeframe, which remains valid below the $85 level.
China Demand Concerns: Oil prices under pressure due to worries about China’s demand outlook. Weaker-than-expected economic data and soft oil imports from China in June are dampening market sentiment.
Anticipation of Chinese Stimulus: Recent data showing a slowdown in China’s quarterly GDP growth has sparked fears of a decline in oil demand. Investors are hoping that Chinese authorities will introduce new measures to stimulate the economy and boost demand.Top of FormBottom of FormTop of Form
Key Support at $81 In Focus: The market is nearing a crucial retest of the $81 support level, which previously supported a rally on July 10th, pushing prices to just below $84. The market’s response to this level is vital for maintaining bullish momentum.
Daily Trend Characteristics: Despite the retracement, the daily trend remains bullish. The market is testing the 45-day EMA channel, coinciding with the 200 EMA channel on the 4-hour chart, both significant support areas. A rejection above $81 could sustain the upward momentum, allowing trading within the $81 to $85 range established over the past three weeks.
Bullish Outlook: Bullish traders will closely monitor the market’s reaction at the $81 level. Signs of rejection here could present the opportunity to initiate new bullish positions, potentially targeting a rally and a retest of the $84 highs.
Bearish Breakthrough Scenario: A break below $81 would shift the technical outlook to bearish on the daily timeframe, with an initial target of $80 and an extended target of $77. Bearish traders are monitoring for a break below $81 followed by a retest of this level as resistance. Such a move would signal a new bearish swing pattern and present opportunities for short positions.
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