Crude Oil Remains Conflicted by Key Technical Levels

Crude Oil Price Analysis:

  • Oil prices remain supported by new supply constraints, but key technical levels hold on
  • US Crude (WTI)aims to clear the $110 psychological handle but will the bullish momentum prevail?
  • price actionremains encapsulated between the Fibonacci levels of historical moves

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Collision between technical and oil fundamentals

Following the invasion of Ukraine in late February, oil prices continued to soar, with WTI and Brent finding support above the $100 per barrel (bbl) mark.

As condemnation against the Kremlin continues to mount, the embargo against Russian energy and gas from Western allies and their European counterparts (including Germany, a major importer of Russian energy) has exacerbated fears that inflationary pressures may continue to mount.

Technical Analysis of US Crude Oil (WTI)

While fundamental factors are likely to remain an important driver of price action, the monthly chart below shows how key technical levels in historical and short-term moves have helped provide firm levels of support and resistance for the price. evolution of prices, holding both ups and downs. at the bay.

After breaking above the 2014 high of $107.65 in early March, the inability to gain ground above $120 allowed sellers to push prices down, before stabilizing around the $100 handle.

With both psychological and Fibonacci Levels Currently in play, the monthly CCI (commodity channel index) remains in overbought territory, suggesting that while the uptrend remains intact (for now), the bulls may be losing steam.

US Crude Oil Monthly Chart (WTI)

Chart prepared by Tammy DaCosta using TradingView

While inflation currently remains at a decade high, supply constraints have been exacerbated by the ongoing conflict between Russia and Ukraine, providing further catalyst for price action.

US Crude Oil Weekly Chart (WTI)

Crude Oil Remains Conflicted by Key Technical Levels

Chart prepared by Tammy DaCosta using TradingView

Like prices continue to oscillate between the Fib levels of the historical movement (2008 – 2020) and 2014 – 2016, the $94-$108 range will likely continue to hold with a breakout on either side increasing the likelihood of a breakout.

For the upward trajectory to hold, the bulls will need to conquer the $108 and $110 levels, with the next level of resistance remaining firm at $116.58 (the 14.4% Fib of the 2008-2020 move). If this level is broken, a break of the psychological bar of $120 could leave the door open for a retest of the 2022 high at $130.5.

US Crude Oil (WTI) Daily Chart

Crude Oil Remains Conflicted by Key Technical Levels

Chart prepared by Tammy DaCosta using TradingView

However, for bearish momentum to gain momentum, sellers would need to drive prices below $100 which could then yield $93.56 (the 38.2% retracement of the move from Nov 2020 to 2022) stake. If prices continue to fall below $90.00 and $88.39 (23.6% Fib from 2014-2016 move)it is possible for WTI to retest $80.00.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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