Technical Analysis: Crude oil rebounds higher this week

This article was submitted by Stanislav Bernukhov, market analyst at Exness.


Crude oil is continuing to rebound higher this week getting back to the 20-day moving average, driven by the unusually higher manufacturing data from China: its PMI had grown to 52.6%, giving a bullish signal for commodity markets, including Crude oil.

The relative weakness of the US dollar was another supporting factor for Oil prices: in spite of increasing hawkish expectations from the FED, the US dollar index corrected.

Though, this growth doesn’t seem very solid as the data from the US is not so optimistic: PMI from the US has recovered to 47.7, less than the anticipated 48.

Opec+ Joint Ministerial Monitoring Committee recommended keeping the production level at the current levels, as there’s uncertainty about further demand levels from China. EIA report from the US was ambiguous: EIA distillate stockpiles have grown to +179.000 bbl, which is potentially negative, while stockpiles in Cushing Okla have grown to +307.000. The latter is a positive factor. So, there’s a combination of positive and negative factors, and no clear one-sided narrative.

Technical view:

From a technical point of view, USOIL is leaning to the upper side of the triangular formation, which is still included in the context of a intermediate-term downtrend. The scenario of an upside breakout is possible as Crude oil is pushed higher by inflation narrative and possible demand from China.

The main question is whether or not price of USOIL would be able to keep the area above $78, or slide back in the range. In a case of a quick breakout, which corresponds to to white line, probably the price is about to slide back.

Should the price stay in the range for a longer period of time (orange scenario), the odds of a wider upswing would increase.

Market Analysis


The performance of Gold is mostly associated with the strength of the US dollar and yields of long-term bonds in both the US and other major economies. Strong labor market in January and stronger than expected CPI print had boosted the US dollar as bond yields started to grow again. That pressured Gold, driving it to the intermediate-term low of around $1805. Later Gold retraced back to the $1840 area, displaying a pause in expected tightening of monetary policy.

Softer than expected data from US PMI supported commodity markets, including Gold, as the US dollar had taken a break.

According to FedWatchTool from CME group, market discounts two points of rising rate until May 2023. Probabilities of a third point of rising are concentrating at around 30%, so that might be an intrigue.

Trader will monitor for publications of non-manufacturing PMI on Friday, as well as next week’s number from the labor market.

Technical view:

From a technical point of view, there are two potential scenarios now. The orange one assumes strong economic publcations (PMI and NFP numbers) and further strengthening of the US dollar, the white scenario might happen in a case of a mild drawdown of macroeconomic data and less hawkish FED.

Last week Fiber and Gold where both are making bearish corrections since the US Dollar Index wass trading in a slightly bullish movement. Read More..

Disclaimer: opinions are personal to the author and do not reflect the opinions of Exness or LeapRate.

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