We’ve got a bunch of catalyst that might spark a reversal on crude oil rallies this week.
Oh, and did I mention this neat chart pattern, too?
Here’s what I’m lookin’ at:
WTI Crude Oil: 1-hour
It looks like crude oil fell through the support zone we were watching last week, prompting more bears to come out.
Is a reversal from the uptrend in order?
I’m seeing a head and shoulders pattern on the hourly time frame, suggesting that the commodity might be in for a drop that’s the same height as the formation.
Price has yet to break below the neckline to confirm that a downtrend is in order, but Stochastic is hinting that sellers have enough energy to do just that!
The 100 SMA is above the 200 SMA to indicate that bullish momentum is in play, though. Then again, crude oil has dipped below the 100 SMA, so this might hold as dynamic resistance from here.
So far, risk-off flows stemming from the lockdown in Shanghai is weighing on crude oil, as traders remain wary of pandemic risks.
Also, the OPEC-JMMC is meeting this week, so any talk of adjusting their output deal to keep gains in check might spark volatility for crude oil. After all, prices are still elevated and the prospect of worsening geopolitical tensions could mean more upside for the commodity.
Economic data from Uncle Sam is also worth keeping tabs on, as strong figures could boost expectations of consecutive rate hikes from the Fed. In turn, this could mean higher borrowing costs that could dampen consumer activity and commodity purchases down the line.
