Remember the resistance zone we marked a few days ago?
Well, WTI crude oil has broken above the area!
This time, we’re looking at the possibility of a break-and-retest situation:
WTI Crude Oil (USOIL) 4-hour Chart by TradingView
In case you missed today’s Daily Market Recap, you should know that a lack of material escalation in the Middle East and concerns over China’s growth have limited the demand for crude oil.
Meanwhile, traders reeling in their Fed rate cut expectations have supported the U.S. dollar against some of its major counterparts.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on crude oil and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
U.S. crude oil prices, which hit the $78.00 mark yesterday, have dipped and are now trading closer to the $73.50 levels.
How low can oil go before the bulls step in again?
We’re looking at the $72.00 psychological handle, which marks the 50% Fibonacci retracement of USOIL’s October upswing. Not only that, but $72.00 would also align with the Pivot Point area, broken trend line resistance, and the 100 and 200 SMA in the 4-hour time frame.
If USOIL doesn’t see green candlesticks and sustained trading above its current $73.50 levels, then the asset could go down to our potential support zone where it may attract more buying pressure.
But if the asset continues to see downside pressure, then you may want to pay closer attention to our support zone. Specifically, bearish candlesticks and sustained trading below the trend line expose USOIL to a potential return to the $68.00 area of interest just under the S1 ($68.88) Pivot Point line and monthly lows.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier market catalysts when trading this one. Good luck!