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Crude Oil Price Recovery Won’t Be Easy

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Aayush Jindal

Key Highlights

  • Crude oil price declined below the key $56.00support area against the US dollar.
  • A crucial bearish trend is forming withresistance near $57.50 on the 4-hours chart of XTI/USD.
  • The IBD/TIPP Economic Optimism declined from56.6 to 55.1 in August 2019.
  • The EIA crude oil stocks (weekly measure) couldchange -3.313M (previous - -8.496M).

Crude Oil Price Technical Analysis

There was a strong decline in crude oil price from the $58.73 swing high against the US Dollar. The price broke the key $58.00 and $56.00 support levels to enter a bearish zone.

Crude Oil Price Technical Analysis

Looking at the 4-hours chart of XTI/USD, the price even declined sharply below the $55.0 and $54.00 levels. A swing low was formed near $53.52 and the price settled well below the 100 (red) simple moving average (4-hours).

Recently, there was an upside correction above the $54.50level plus the 23.6% Fib retracement level of the drop from $58.73 to $53.52. However,the upward move was capped by the previous support (now resistance) near$60.00.

Additionally, the price stayed below the 50% Fib retracementlevel of the drop from $58.73 to $53.52. More importantly, there is a crucialbearish trend forming with resistance near $57.50 on the same chart along withthe 100 SMA.

Therefore, the price is likely to face a strong resistanceon the upside near the $56.00 and $57.00 levels. A successful close above the$57.00 level and the 100 SMA is needed for a strong recovery in the comingdays.

Conversely, if the price fails to surpass $56.00 and $57.00,there could be a fresh decline. An immediate support is near the $54.00 level,below which the price could even slide below $53.50. The next important supportis near the $52.40 level.

Looking at major pairs, EUR/USD seems to struggling to hold recent gains, and GBP/USD is still trading in a downtrend below 1.2250.

Economic Releases to Watch Today

  • Germany’s Industrial Production for March 2019(MoM) - Forecast -0.5%, versus +2.2% previous.
  • EIA Crude Oil Stocks Change – Forecast -3.313M,versus -8.496M previous.
  • Canada’s Ivey PMI August 2019 - Forecast 61.3,versus 60.0 previous.
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