Crude oil was extremely bearish yesterday due to major fundamental news going against the bulls. However, we still managed to receive some respite during US session where US stocks enjoyed a technical rebound, pulling WTI prices along. This rally is also a good showcase of strong technical influence as the rebound happened after prices dipped below the 103.0 key support, forming a descending Channel when 102.5 is tagged. Nonetheless the overall setup remains bearish with prices unable to clear descending Channel Top, not to even mention the 104.0 round figure resistance.
Currently, we’re trading below the softer resistance of 103.5, which opens up a move back towards Channel Bottom with 103.0 expected to provide support once again. Stochastic readings agree with stoch levels pointing lower once again, and may trigger strong bearish acceleration should readings break the “support” of 60.0.
Should 103.0 be broken on the short-term, we could see a even greater push lower with 98.0 – 100.0 support zone the bearish target if this break is confirmed on the long-term chart as well. Given that Stochastic readings still have a fair distance to go before hitting Oversold, it is not unreasonable to believe that prices may be able to hit the lower end of the support zone before stronger bullish pullback is expected.
However, the assumption is that 103.0 is broken. There is still the off chance that short-term momentum may actually push prices higher just like yesterday’s early US session. Should 103.5 and confluence with Descending Channel Top is broken, 104.0 and 104.5 open up as a bullish targets. If both are broken conclusively, we may actually see further bullish acceleration towards 108.5 – 110.0 as that will be an affirmation of 103.0 holding on the Weekly Chart.
Fundamentals still favor downsides though, but trades need to be aware that we could still see knee jerk bullish reactions should US resolve the Debt Ceiling and Government Budget issues. Hence, traders will do well to be more cautious as uncertainty abounds in the short-term.
GBP/USD – Moves well off Support at 1.60
AUD/USD – Some Short Term Support at 0.94
EUR/USD – Key Level of 1.3550 is Reinforced
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.