Crude oil continues to range as the markets weighs the potential scenarios. What's next?
Crude oil continues to display a rangebound price action as it struggles to break above the key 72.00 resistance. The Trump's victory might be seen as bearish in the short term for fear of the tariffs and a potential slowdown in global growth as other countries retaliate.
It's worth remembering that in 2016, crude oil did fall initially on Trump's victory but eventually rallied for more than 20% in the following three months on higher global growth expectations.
The red sweep should see Trump focusing more on tax cuts and domestic issues which should eventually lift global growth expectations. If we had a divided Congress, then his first priority could have been indeed a trade war.
Moreover, we have also central banks easing their monetary policies and that generally leads the manufacturing cycle, which is likely to be supportive for the crude oil market.
On the daily chart, we can see that crude oil is struggling a lot breaking the key resistance around the 72.00 handle. The buyers will want to see the price breaking higher to start targeting the major trendline around the 78.00 handle. The sellers, on the other hand, will likely keep on stepping in around the resistance to position for a drop into the 65.00 handle.
On the 4 hour chart, we can see that we have a range between the 72.00 resistance and the 69.50 support. The sellers will want to see the price breaking lower to increase the bearish bets into the 65.00 handle, while the buyers will likely step in around the support to position for a rally back into the resistance.
On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum. The sellers will likely keep on leaning on it to push into new lows, while the buyers will look for a break higher to increase the bullish bets into the resistance. The red lines define the average daily range for today.
This week is a bit empty on the data front with the most important releases scheduled for the latter part of the week. On Wednesday, we have the US CPI report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US Retail Sales data.