Crude Oil Technical Analysis: December 6, 2017

By Usman Ahmed December 6, 2017, 5:22 am • Posted in Commodities

Key Highlights

Crude oil price struggled to move above the $58.00-59.00 levels and moved down against the US dollar.
There was a break below a major bullish trend line with support at $57.40 on the 4-hours chart of XTI/USD.
The US Services PMI in Nov 2017 decreased from the preliminary reading of 54.7 to 54.5.
Today, the US ADP Employment Change will be released for Nov 2017, which is forecasted to post a change of 185K, less than the last 235K.

Crude Oil Price Technical Analysis

Crude oil price gained heavily in November 2017 and moved above $58.00 against the US dollar. However, the price struggled during the start of December 2017 and is currently under bearish pressure.

Looking at the 4-hours chart of XTI/USD, the price clearly failed to move above $59.00. There were two rejections near $58.80 and the price recently moved below the 61.8% Fib retracement level of the last wave from the $56.64 low to $58.77 high.

Moreover, there was a break below a major bullish trend line with supports at $57.40 on the same chart. At the moment, the price is holding the 100 simple moving average (red, 4-hour), but remains at a risk of more declines towards $55.00 in the near term.

The next major support on the downside is around $55.50 and the 200 simple moving average (green, 4-hour). On the upside, resistances are at $57.80, $58.00 and the all-important $58.80.

US Services PMI

Recently in the US, the Services Purchasing Managers Index (PMI) for Nov 2017 was released by Markit Economics. The forecast was slated for a rise from the preliminary reading of 54.7 to 55.4.

However, the actual result was on the lower side as there was a decline in the US Services PMI to 54.5, down from October’s reading of 55.3. Moreover, the HIS Markit U.S. Composite PMI™ Output Index declined from October’s reading of 55.2 to 54.5.

Commenting on the report, the Chief Business Economist at IHS Markit, Chris Williamson, stated:

The slowest growth of services sector business activity since June, alongside a slight dip in the pace of manufacturing expansion, means the November PMI surveys registered a modest cooling in the overall rate of business growth. Mid-way through the fourth quarter, the surveys are still pointing to a reasonable GDP growth rate of approximately 2.5%.

Overall, the result was a bit less than the market forecast, which helped Crude oil price is staying above $57.00.