Crude Oil Price Triangle Persists - Downside Break May Help USD/CAD

With the US-China trade war in a temporary state of détente – the United States’ 10% tariffs on $300 billion imported Chinese goods set for September 1 has been delayed until December 15 – global financial markets have seen violent price swings; crude oil prices are no different.

Oil Inventory Data Does No Favors for Crude Oil

Compounding global growth concerns was the release of the US Energy Information Administration’s weekly energy inventory update. Crude oil inventories rose by 1.58 million barrels against an expected drawdown of -2.2 million barrels. Oversupply concerns are nothing new, but in context of geopolitical tensions surrounding Iran and the Strait of Hormuz, the clear lack of demand for energy consumption by the world’s largest economy is doing no favors in an already-dour environment.

Crude Oil Technical Analysis: Daily Price Chart (July 2018 to July 2019) (Chart 1)

(Click on image to enlarge)

Crude Oil Price Triangle Persists - Downside Break May Help USD/CAD

After failing to do so last week, crude oil prices are once again looking at an attempt to breakdown out of a multi-month symmetrical. Last week crude oil prices broke the trendline from the December 2018 and June 2019 lows before finding support around the June 2019 swing lows and the 23.6% retracement of the 2018 high/low range near 50.49.

The attempt to get back into the symmetrical triangle may ultimately prove a failure; if so, more downside may arrive quickly. Price is moving back below the daily 8-, 13-, and 21-EMA envelope. During the rebound, daily MACD never climbed back above the signal line into bullish territory. Slow Stochastics have rebounded out of oversold territory but are barely back to neutral.

Crude Oil Technical Analysis: Weekly Price Chart (July 2018 to July 2019) (Chart 1)

(Click on image to enlarge)

Crude Oil Price Triangle Persists - Downside Break May Help USD/CAD

It’s important to keep a long-term perspective on crude oil prices: a look at the crude oil price weekly chart shows how potentially hazardous the technical situation could become over the next few weeks. Despite last week’s bullish hammer, this week is producing an inverted hammer. With daily MACD and Slow Stochastics pointing lower in bearish territory, momentum remains to the downside. Ultimately, failure in the symmetrical triangle points to a return to the December 2018 low at 42.34.

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