Fundamental Outlook
West Texas Intermediate WTI crude oil surrendered early gains on Tuesday and closed with a loss after the United States reported inflation ran hotter than expected last month, raising expectations for another big rise in US interest rates that will slow growth and cut demand.
WTI crude for October delivery closed down US$0.47 to settle at US$87.31 per barrel, Marketwatch reported, after earlier touching US$89.31. November Brent crude, the global benchmark, was last seen down US$0.63 to US$93.37, while Western Canada Select was down US$0.70 to US$66.39 per barrel.
Inflation in the United States ran at an 8.3% annualized pace in August, ahead of expectations for an 8.0% rise, according to Marketwatch, though lower than the 8.5% rate a month earlier. The hot pace may convince the Federal Reserve to hike rates by 75 basis points when its policy committee meets next week and lower market hopes for a smaller increase.
A hike of that size and the potential for a recession spurred by higher rates adds to demand worries as China imports remain weak with the country continuing harsh lockdown policies to slow the spread of Covid-19, even as supply remains tight.
"The oil market, just like most other commodities, has received support from a weaker dollar and fading prospect of an Iran nuclear deal anytime soon. However, the potential for a fresh and strong upside push in crude oil has faded as the world is going through a period of lower growth," Saxo Bank noted on its website.
Monthly Chart Analysis
The price is bearish running in the bullish half a bats 2nd level that has recently retested the 1st level and 21 moving average that were previously bullish broken and not retested. Having the price in the 2nd level signals a possibility for it to rally for the half a bats 3rd level, however, the price might drop for the Monthly Neckline 3 and 50 moving average because they previous broken and not retested. If the price bounces off the 3rd Monthly Key Lvl and 21 moving average with a bullish reversal candle pattern (or just a reversal pattern) that leads the price to bullish break and retest the Weekly Neckline 2 and 8 moving average, that will give us a bullish signal that will lead to the rally. On the other hand, if the price either bearish breaks and retests the 3rd Monthly Key Lvl and 21 moving average before or after bouncing off the Weekly Neckline 2 and 8 moving average, that will lead to the bearish drop.
Weekly Chart Analysis
The price is currently bullish running below the bearish H&S L1 support, 50 and bearish crossed short-term moving averages. Previously, the price bearish broke and didn't retest the Weekly H&S Neckline and 21 moving averages; and it bullish broke and didn't retest the Daily H&S Neckline 2. That gives us two targets (a bullish and bearish one). If the price bounces off the 3rd Monthly Key Lvl with a bullish reversal candle pattern that leads it to bullish break and retest the Weekly Neckline 2, 50 and 8 moving average, the price will be exposed to the bullish target. On the other hand, if the price bounces off the 1st Weekly Key Lvl with a bearish candle formation, that will signal an upcoming drop to the Daily H&S Neckline 2 together for the H&S L2 and L3.
Daily Chart Analysis
The price is currently running in the double tops L2 and L1 and in between the short-term moving averages. Previously, it bearish broke and didn't retest the Weekly Neckline 2 and 50 moving average; and it bullish broke and didn't retest the Daily H&S Neckline. If the price closes with a bullish reversal candle pattern above the 1st Weekly Key Lvl and 8 moving average, that will lead to a bullish rally to the targets. On the hand, if the price closes with a bearish candle below the 1st Weekly Key Lvl and 8 moving average, that will lead to a drop for the bearish target together for the double tops level 3.
As you can, all these timeframes are inter-connected in some way. They're communicating to each other on how they will rise and drop, confirming or dis-confirming their signals in 3 possible ways.
That's it for today. I hope you found value in this article. If you have a different concept in mind, feel free to share it in the comments section. I'd love to know your thoughts!
Stay Blessed,
Sphatrades.
West Texas Intermediate WTI crude oil surrendered early gains on Tuesday and closed with a loss after the United States reported inflation ran hotter than expected last month, raising expectations for another big rise in US interest rates that will slow growth and cut demand.
WTI crude for October delivery closed down US$0.47 to settle at US$87.31 per barrel, Marketwatch reported, after earlier touching US$89.31. November Brent crude, the global benchmark, was last seen down US$0.63 to US$93.37, while Western Canada Select was down US$0.70 to US$66.39 per barrel.
Inflation in the United States ran at an 8.3% annualized pace in August, ahead of expectations for an 8.0% rise, according to Marketwatch, though lower than the 8.5% rate a month earlier. The hot pace may convince the Federal Reserve to hike rates by 75 basis points when its policy committee meets next week and lower market hopes for a smaller increase.
A hike of that size and the potential for a recession spurred by higher rates adds to demand worries as China imports remain weak with the country continuing harsh lockdown policies to slow the spread of Covid-19, even as supply remains tight.
"The oil market, just like most other commodities, has received support from a weaker dollar and fading prospect of an Iran nuclear deal anytime soon. However, the potential for a fresh and strong upside push in crude oil has faded as the world is going through a period of lower growth," Saxo Bank noted on its website.
Monthly Chart Analysis
The price is bearish running in the bullish half a bats 2nd level that has recently retested the 1st level and 21 moving average that were previously bullish broken and not retested. Having the price in the 2nd level signals a possibility for it to rally for the half a bats 3rd level, however, the price might drop for the Monthly Neckline 3 and 50 moving average because they previous broken and not retested. If the price bounces off the 3rd Monthly Key Lvl and 21 moving average with a bullish reversal candle pattern (or just a reversal pattern) that leads the price to bullish break and retest the Weekly Neckline 2 and 8 moving average, that will give us a bullish signal that will lead to the rally. On the other hand, if the price either bearish breaks and retests the 3rd Monthly Key Lvl and 21 moving average before or after bouncing off the Weekly Neckline 2 and 8 moving average, that will lead to the bearish drop.
Weekly Chart Analysis
The price is currently bullish running below the bearish H&S L1 support, 50 and bearish crossed short-term moving averages. Previously, the price bearish broke and didn't retest the Weekly H&S Neckline and 21 moving averages; and it bullish broke and didn't retest the Daily H&S Neckline 2. That gives us two targets (a bullish and bearish one). If the price bounces off the 3rd Monthly Key Lvl with a bullish reversal candle pattern that leads it to bullish break and retest the Weekly Neckline 2, 50 and 8 moving average, the price will be exposed to the bullish target. On the other hand, if the price bounces off the 1st Weekly Key Lvl with a bearish candle formation, that will signal an upcoming drop to the Daily H&S Neckline 2 together for the H&S L2 and L3.
Daily Chart Analysis
The price is currently running in the double tops L2 and L1 and in between the short-term moving averages. Previously, it bearish broke and didn't retest the Weekly Neckline 2 and 50 moving average; and it bullish broke and didn't retest the Daily H&S Neckline. If the price closes with a bullish reversal candle pattern above the 1st Weekly Key Lvl and 8 moving average, that will lead to a bullish rally to the targets. On the hand, if the price closes with a bearish candle below the 1st Weekly Key Lvl and 8 moving average, that will lead to a drop for the bearish target together for the double tops level 3.
As you can, all these timeframes are inter-connected in some way. They're communicating to each other on how they will rise and drop, confirming or dis-confirming their signals in 3 possible ways.
That's it for today. I hope you found value in this article. If you have a different concept in mind, feel free to share it in the comments section. I'd love to know your thoughts!
Stay Blessed,
Sphatrades.
