Crude Oil Insights: Riding the Waves of Economic Shifts and Market Signals

Despite rebounding from their lows, Crude Oil prices have remained mostly flat this year due to concerns about a global economic slowdown, as evidenced by various economic indicators in China and the US. Key events to watch include Canada’s Ivey PMI on Wednesday and the Employment Change report on Friday. It is also important to note the key resistance and support levels that may influence decision-making for market participants.

High Impact Economic Events

Wednesday 14:00 (GMT+0) – Canada: Ivey PMI (CAD)

Friday 12:30 (GMT+0) -Canada: Employment Change (CAD)

Crude oil prices have been moving sideways due to worries about a global economic slowdown, as shown by various economic indicators in China and the US. After hitting a high of $84.27 per barrel on July 5, the market turned bearish, evidenced by the formation of a Japanese candlestick reversal pattern called a Shooting Star. Additionally, a bearish chart reversal pattern known as a failure swing indicated a potential further decrease in prices. Specifically, the peak at 83.12 failed to surpass the previous peak, and prices subsequently fell below the trough at 80.49, confirming a failure swing. Technical indicators and oscillators support this bearish outlook. In particular, the price dropped below the 20 and 50-period Exponential Moving Average (EMA). Additionally, the two EMAs formed a Death Cross, which is considered a strong bearish signal. The Momentum oscillator crossed below the 100 baseline, while the relative strength index (RSI) dropped below the 50 line, both indicating a downward trend.

Should the buyers gain market control, traders may direct their attention toward the four potential resistance levels below:

76.43: The first price target is set at 76.43, representing the 38.2% Fibonacci Retracement between the peak at 84.27 and the trough at 71.58.

77.54: The second target is estimated at 77.54, calculated as the (R1) resistance using the weekly Pivot Points tool.

79.42: The third resistance level, 79.42, corresponds to the 61.8% Fibonacci Retracement between the peak at 84.27 and the trough at 71.58.

80.49: An additional resistance is seen at 80.49, aligning with the trough of the failure swing reversal pattern.

Should the sellers maintain market control, traders may consider the four potential support levels listed below:

71.58: The primary downside target is seen at 71.58, reflecting the lowest price reached since May.

69.25: The second support level is 69.25, estimated as the 161.8% Fibonacci Extension attached to the swing low of 71.58 and swing high of 75.55.

65.80: The third support line is identified at 65.80, reflecting the (S3) support calculated using the weekly Pivot Points method.

59.38: An additional downward target is observed at 59.38, estimated by attaching the Fibonacci Extension to the swing low of 71.58 and swing high of 75.55.

In conclusion, Crude Oil prices have remained relatively flat this year, influenced by concerns about a global economic slowdown and significant economic indicators from China and the US. Traders are closely monitoring the energy sector and also paying attention to Canada’s upcoming Ivey PMI and Employment Change report. Technical analysis indicates a bearish outlook, with important resistance and support levels shaping future price movements. These factors will be crucial for market participants in making well-informed trading decisions.