Oil prices fell over 1% on Tuesday as traders reacted to disappointing economic growth data from China. West Texas Intermediate (WTI) hovered around $80 per barrel, while Brent crude traded slightly above $83 per barrel. Dennis Kissler, senior vice president at BOK Financial, noted that “weaker economic data continues to flow from China, with government support programs falling short and many of China’s refineries reducing operations due to weaker fuel demand.” The Chinese economy grew by 4.7% in the second quarter, missing analysts’ projections of 5.1% GDP growth.
This decline in oil prices occurred despite expectations of Federal Reserve rate cuts in September. According to CME FedWatch data, traders have fully priced in a rate cut. On Monday, Fed Chair Jerome Powell indicated that the central bank might be nearing a rate cut, citing recent improvements in inflation readings. The US dollar also strengthened against a basket of currencies on Tuesday, making dollar-denominated crude more expensive.
Earlier in July, oil prices neared a two-month high due to supply threats from Hurricane Beryl and ongoing Middle East tensions. Some analysts predict Brent crude could reach $90 per barrel this year due to concerns about a broader conflict in the Middle East involving Iran. Escalating tensions between Israel and Lebanon’s Hezbollah, backed by Iran, have heightened fears of a more direct involvement from Tehran.
Year-to-date, WTI has increased by approximately 13%, while Brent has risen by more than 10%.
To perform a top-down analysis on West Texas Intermediate (WTI) Crude Oil Futures, I’ll follow a structured approach, starting from higher timeframes (Monthly) down to lower timeframes (15-Minute). This will help identify key support and resistance levels, trends, and potential trading opportunities.
1. Monthly Timeframe Analysis
Trend Direction
• The monthly chart shows WTI in a broader range with significant volatility.
• Historically, prices have fluctuated between $65 and $110.
Key Levels
• Resistance: Around $100-$110, which acted as a significant resistance zone in the past.
• Support: Around $65-$70, where the price found strong support during downturns.
2. Weekly Timeframe Analysis
Trend Direction
• The weekly chart indicates a more detailed view of the fluctuations within the broader range observed on the monthly chart.
• The current trend shows recovery from lows, with the price pushing towards higher resistance zones.
Key Levels
• Resistance: Around $90-$93, aligning with recent highs.
• Support: Around $75-$78, showing multiple bounces from this level.
3. Daily Timeframe Analysis
Trend Direction
• The daily chart shows a clearer uptrend with higher highs and higher lows forming since the recent bottom.
• The price is consolidating near recent highs, indicating potential for continuation or a pullback.
Key Levels
• Resistance: Around $85-$87, which corresponds to the recent highs.
• Support: Immediate support around $78-$80, with more substantial support at $75.
4. 4-Hour Timeframe Analysis
Trend Direction
• The 4-hour chart reveals the intraday trends within the daily movements.
• There is a visible uptrend with minor corrections.
Key Levels
• Resistance: Immediate resistance around $83-$85.
• Support: Around $80-$81, aligning with recent lows and consolidation zones.
5. 1-Hour Timeframe Analysis
Trend Direction
• The 1-hour chart shows shorter-term trends and consolidations.
• The price action indicates potential for both upward and downward movements, depending on key levels being tested.
Key Levels
• Resistance: Immediate resistance at $82-$83.
• Support: Around $80, with a deeper support zone at $78.
6. 15-Minute Timeframe Analysis
Trend Direction
• The 15-minute chart shows very short-term price movements, useful for intraday trading.
• The price shows frequent tests of support and resistance within smaller ranges.
Key Levels
• Resistance: Around $81.50-$82.
• Support: Around $80.50, with lower support at $79.
Trading Strategy
Long Positions
• Entry: Near support zones identified in the 4-hour and 1-hour charts, particularly around $80-$81.
• Confirmation: Look for bullish patterns or candlestick formations.
• Targets: Resistance levels at $82-$85.
• Stop Loss: Below $79, to protect against breakdowns.
Short Positions
• Entry: Near resistance zones identified in the 1-hour and 4-hour charts, particularly around $83-$85.
• Confirmation: Look for bearish patterns or candlestick formations.
• Targets: Support levels at $80-$78.
• Stop Loss: Above $86, to protect against breakouts.
Risk Management
• Position Sizing: Use proper position sizing techniques to manage risk.
• Risk-Reward Ratio: Aim for a favorable risk-reward ratio, typically 1:2 or higher.
This decline in oil prices occurred despite expectations of Federal Reserve rate cuts in September. According to CME FedWatch data, traders have fully priced in a rate cut. On Monday, Fed Chair Jerome Powell indicated that the central bank might be nearing a rate cut, citing recent improvements in inflation readings. The US dollar also strengthened against a basket of currencies on Tuesday, making dollar-denominated crude more expensive.
Earlier in July, oil prices neared a two-month high due to supply threats from Hurricane Beryl and ongoing Middle East tensions. Some analysts predict Brent crude could reach $90 per barrel this year due to concerns about a broader conflict in the Middle East involving Iran. Escalating tensions between Israel and Lebanon’s Hezbollah, backed by Iran, have heightened fears of a more direct involvement from Tehran.
Year-to-date, WTI has increased by approximately 13%, while Brent has risen by more than 10%.
To perform a top-down analysis on West Texas Intermediate (WTI) Crude Oil Futures, I’ll follow a structured approach, starting from higher timeframes (Monthly) down to lower timeframes (15-Minute). This will help identify key support and resistance levels, trends, and potential trading opportunities.
1. Monthly Timeframe Analysis
Trend Direction
• The monthly chart shows WTI in a broader range with significant volatility.
• Historically, prices have fluctuated between $65 and $110.
Key Levels
• Resistance: Around $100-$110, which acted as a significant resistance zone in the past.
• Support: Around $65-$70, where the price found strong support during downturns.
2. Weekly Timeframe Analysis
Trend Direction
• The weekly chart indicates a more detailed view of the fluctuations within the broader range observed on the monthly chart.
• The current trend shows recovery from lows, with the price pushing towards higher resistance zones.
Key Levels
• Resistance: Around $90-$93, aligning with recent highs.
• Support: Around $75-$78, showing multiple bounces from this level.
3. Daily Timeframe Analysis
Trend Direction
• The daily chart shows a clearer uptrend with higher highs and higher lows forming since the recent bottom.
• The price is consolidating near recent highs, indicating potential for continuation or a pullback.
Key Levels
• Resistance: Around $85-$87, which corresponds to the recent highs.
• Support: Immediate support around $78-$80, with more substantial support at $75.
4. 4-Hour Timeframe Analysis
Trend Direction
• The 4-hour chart reveals the intraday trends within the daily movements.
• There is a visible uptrend with minor corrections.
Key Levels
• Resistance: Immediate resistance around $83-$85.
• Support: Around $80-$81, aligning with recent lows and consolidation zones.
5. 1-Hour Timeframe Analysis
Trend Direction
• The 1-hour chart shows shorter-term trends and consolidations.
• The price action indicates potential for both upward and downward movements, depending on key levels being tested.
Key Levels
• Resistance: Immediate resistance at $82-$83.
• Support: Around $80, with a deeper support zone at $78.
6. 15-Minute Timeframe Analysis
Trend Direction
• The 15-minute chart shows very short-term price movements, useful for intraday trading.
• The price shows frequent tests of support and resistance within smaller ranges.
Key Levels
• Resistance: Around $81.50-$82.
• Support: Around $80.50, with lower support at $79.
Trading Strategy
Long Positions
• Entry: Near support zones identified in the 4-hour and 1-hour charts, particularly around $80-$81.
• Confirmation: Look for bullish patterns or candlestick formations.
• Targets: Resistance levels at $82-$85.
• Stop Loss: Below $79, to protect against breakdowns.
Short Positions
• Entry: Near resistance zones identified in the 1-hour and 4-hour charts, particularly around $83-$85.
• Confirmation: Look for bearish patterns or candlestick formations.
• Targets: Support levels at $80-$78.
• Stop Loss: Above $86, to protect against breakouts.
Risk Management
• Position Sizing: Use proper position sizing techniques to manage risk.
• Risk-Reward Ratio: Aim for a favorable risk-reward ratio, typically 1:2 or higher.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.