Financial markets these days appear to be inured already with the violence we see globally that unless actual supply disruptions appear traders and investors will just shrugged it off. Tuesday saw oil prices dropping to its two week consolidation lows though absent any fresh angle from supply and demand we do not expect a further decline. Note however today’s US CPI report at 1230GMT. Should the numbers come in strong it could be a catalyst of testing the Daily Consolidation Low if not break. It could be argued that US inflation leads to prolonged tight monetary conditions in the US, dampening end demand for oil. That said cyclical factors may soon be a factor with the US summer driving season fast approaching.
Resistance
- 84.75 – 20D Moving Average
- 84.29 – Daily Consolidation Resistance
- 83.34 – Intraday Consolidation Resistance
Support
- 81.55 – Daily Consolidation Low / Floor
- 80.80 – Daily Consolidation Low
- 80.05 – Daily Consolidation Low
Oil has been in a consolidation for the past two weeks unable to take out its 81.55 low for the period while attempts to move higher has been repeatedly frustrated. Indicator wise we have a dead cross in the moving averages with oscillators heading lower. Intraday we are just under the midpoint of this consolidation. For now we will look for the consolidation to continue looking to sell if long wicks appear in the hourly charts from our resistances and buy off 81.55 with long hourly tails or engulfing candles. A break of 81.55 may also be seen as a bearish entry point targeting 80.05 the daily consolidation lows from February to March.
