Crude Oil prices decreased in response to a Producer Price Index that exceeded expectations, ongoing inflationary pressures, geopolitical uncertainty, a weakening US Dollar Index, and delays in anticipated interest rate reductions by the Federal Reserve. The Consumer Price Index and Retail Sales reports will be released later today, with high expectations. Traders will closely monitor the Crude Oil price this week as significant economic data that could affect its direction will be released.
Overview
Crude Oil prices decreased in response to a Producer Price Index that exceeded expectations, ongoing inflationary pressures, geopolitical uncertainty, a weakening US Dollar Index, and delays in anticipated interest rate reductions by the Federal Reserve. The Consumer Price Index and Retail Sales reports will be released later today, with high expectations. Traders will closely monitor the Crude Oil price this week as significant economic data that could affect its direction will be released.
High Impact Economic Events
Wednesday 01:30 am (GMT+0): Wage Price Index q/q (AUD)
Wednesday 12:30 pm (GMT+0): Core CPI m/m (USD)
Wednesday 12:30 pm (GMT+0): Core Retail Sales m/m (USD)
Wednesday 12:30 pm (GMT+0): CPI m/m (USD)
Wednesday 12:30 pm (GMT+0): CPI y/y (USD)
Wednesday 12:30 pm (GMT+0): Empire State Manufacturing Index (USD)
Wednesday 12:30 pm (GMT+0): Retail Sales m/m (USD)
Wednesday 02:30 pm (GMT+0): Crude Oil Inventories(USD)
Thursday 01:30 am (GMT+0): Employment Change (AUD)
Thursday 01:30 am (GMT+0): Unemployment Rate (AUD)
Technical Analysis
Crude oil has been on a downtrend since April 5, when it reached a high of 87.813 for the year. The bears pushed crude oil prices lower, leading to a technical reversal known as a failure swing. Specifically, the peak at 84.778 US dollars per barrel failed to surpass the previous peak, and instead, prices dropped below the trough of 81.115, resulting in the failure swing. This led to more pressure on crude oil prices, supported by both the exponential moving average and the momentum oscillator. Prices are currently below the 50-period exponential moving average, and the momentum oscillator is recording values below the 100 baseline. It is worth noting that Crude oil candlesticks registered six consecutive lower highs on the weekly price chart.
Potential Downside Targets
Should the bearish momentum continue to dominate the market, traders may consider the following three potential downside targets:
76.851: The initial price target is seen at 76.851, corresponding to the second support (S2) utilizing the weekly Pivot Points methodology.
75.188: The second price objective stands at 75.188, aligning with the 261.8 percent Fibonacci Extension drawn from the trough of 81.115 to the peak of 84.778.
71.360: An additional potential price objective could be identified at 71.360, representing the trough marked on May 2.
Conclusion
Currently, Crude Oil prices are on a downward trend due to a technical reversal known as a failure swing. This has caused the exchange rate to move below the 50-period Exponential Moving Average. The reasons behind this could be geopolitical unrest, persistent inflation in the US economy, and uncertainty around interest rate cuts by the Fed. The current negative momentum suggests that Crude Oil prices may decrease further, emphasizing the importance of carefully managing market risks. It's crucial to stay updated with economic events and geopolitical changes to make informed trading decisions in financial markets.