Crude oil triangle
Oil reversed sharply from bullish to bearish on Tuesday, losing around 6.5% and below $75/bbl WTI. The reversal fits neatly into a tapered triangle pattern, with a setback from the upper boundary earlier in the week to the lower boundary. A knock to the upside from current levels would allow oil to return to $80 quickly. However, a break below the previous local lows at $74 would signal an exit from the consolidation pattern.
Since last December, oil has formed a triangle with its centre of gravity at $77 (the local lows of September and November) and a steadily shrinking trading range. Oil is successfully balancing news of production cuts and a strong labour market (positive) with monetary tightening and signs of falling demand.
A look at the charts suggests that oil is now choosing its path forward. A reversal to the upside from current levels could be the prologue to a relatively quick return to the $80s.
A close below $74.5 would signal a break in the consolidation pattern of recent months. Confirmation of the bearish signal would come with a drop below $74.0, close to where oil bounced in February. In that case, oil would face a smooth road to $62-63 by the end of the year’s first half.
By the FxPro analyst team
Gold seems to have completed its corrective pullback
The CLARITY Act Is Delayed, but Bitcoin's Long-Term Case Remains Intact
EBC Markets Briefing | Retail investors need a delicate approach to AI FOMO
Weekly Analysis: Easing geopolitical tensions pressure oil prices. Gold spikes following weak employment numbers.
The dollar wavers but climbs
Dollar bounces back ahead of NFP, oil jumps as Iran deal hopes fade
SanDisk’s AI Opportunity Faces the Reality of the NAND Cycle
