News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/MYWlQphqtb
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/paOy1oQmn3
  • US indices have a packed week ahead with earnings from the major technology names, US GDP data due and an FOMC rate decision. With so much on the docket the potential for volatility is heightened. Get your stock market forecast from @PeterHanksFX here: https://t.co/CH4WoStHvu
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/otJwnuR7qe
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/s4lZWdJoXV
  • The US Dollar Index traded higher last week, sustaining its broader uptrend. Conflicting technical signals urge caution, but the directional bias remains skewed to the upside. Get your weekly USD technical forecast from @FxWestwater here: https://t.co/jcwhcsUBEN https://t.co/tKrlrRZlZn
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/MGy9OTXpUI
  • The Australian Dollar still remains vulnerable as it extends losses against its major counterparts. What is the road ahead for AUD/USD, AUD/JPY, AUD/NZD and AUD/CAD? Get your AUD technical forecast from @ddubrovskyFX here: https://t.co/ph20zFv4qS https://t.co/v4g9ATf4rr
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/De69mTseZN
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/D7AeTM5OpH
WTI Crude Oil Tests Critical Support Zone: Can Oil Bulls Hold the Lows?

WTI Crude Oil Tests Critical Support Zone: Can Oil Bulls Hold the Lows?

James Stanley, Senior Strategist

WTI Crude Oil Price Action Talking Points:

  • WTI crude oil prices have fallen by as much as 21.8% in the month of January.
  • Oil bulls were in-control to start the year, but that quickly changed.
  • WTI crude oil is now testing a critical zone of support that held three tests last year.

WTI Crude Oil Falls to Critical Support Zone

It’s been a brutal month in crude oil markets as a series of drivers have pushed prices down to a fresh three-month-low. It didn’t start that way, however, as a quick rush of fear shortly after the New Year open pushed WTI crude oil prices up to a fresh eight-month-high, with a fast move above the $65 level. This was driven by fears of heightened tensions between the US and Iran which could, of course, bring on supply disruptions. But as tensions calmed and cooler heads prevailed, Oil prices gave back those gains and then some; only for another bearish driver to take over after-the-fact.

This driver is one that may stay in the headlines for a while and given the importance of global dynamics for oil prices, this could potentially keep pressure on the offer. The growing fear around Coronavirus hasn’t really been offset yet and the situation continues to develop. The more fear that shows around this theme, the less people will be able to freely travel or even trade between countries, and that can further depress demand for oil.

At this point, WTI crude oil is testing a critical support zone that held the lows throughout last year’s trade. This zone is a confluent area of Fibonacci levels that runs from 50.54 up to 51.68; the former level is the 23.6% retracement of the Q4 2018 sell-off while the latter level is the 61.8% retracement of the recovery move from that prior bearish theme. This zone held three separate support tests last year, the last of which was in October before buyers came back to push into the end of the year.

WTI Crude Oil Daily Price Chart: Return to Key Support

wti crude oil daily price chart

Chart prepared by James Stanley; Crude Oil on Tradingview

Can Sellers Breach the 50-Handle? And if So, Where to Next?

Support is unlikely to hold up forever but, at this point, the quandary as to whether this current test will hold or not comes down to matter of force and how aggressively sellers might continue to push. Prior instances of support in this region have often been coupled with supply cuts or other verbiage from interested parties that helped to tilt the supply/demand equation back into the favor of oil bulls. But, for this test, those same actors may not have the same firepower as the current bearish run is emblematic of a fear-based scenario that, as yet, doesn’t have an answer or even much clarity.

On a longer-term basis and something that I’ve often discussed in webinars, time does not appear to be on the side of bulls in Oil. Similar to the shorter-term layout, there’s a level of support lurking below current price action that’s held three separate tests: This takes place around the 42-level, and this was the same price that helped to arrest that Q4 2018 sell-off. A breach of the 50-handle opens the door for another test down around the 42-handle.

On the way down to that three-year-low around 42, a potential stopping point for the move could appear around 47.50, where exists a bit of Fibonacci confluence.

WTI Crude Oil Weekly Price Chart

wti crude oil weekly price chart

Chart prepared by James Stanley; Crude Oil on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES