Technical Analysis

Possible bounce on Crude Oil after FED chair comments

By Antreas Themistokleous

10 February 2023

The price of Crude oil (USOIL) traded in a relatively steady decline in the last 3 months. Positive Dollar news came last week like the exponentially better than expected NFP figure of 517 thousand against a consensus of 185 thousand.

Better job openings and also decreased unemployment created losses for oil. Oil is already on the move to regain some losses following the restart of Chinese trading activity on 30 January after China’s Lunar New Year.

Comments from Fed chair J. Powell were seen as less hawkish than feared, boosting investors' confidence and making them more willing to possibly increase their risk appetite. A weaker US currency makes oil cheaper for buyers holding other currencies.

 OPEC+ decided to keep the output limitations in place during an online meeting last week, making the probability of the group sticking with the current policy at its next meeting a very possible scenario.

From a technical point of view, the price found support on the lower band of the Bollinger bands around the $73,50, and is currently trading on a technical resistance level which is made up of the 38.2% of the Fibonacci retracement level and the 20 and 50-day moving averages.

If the bulls are strong on this swing, we might possibly see the next level of resistance around the $81,50 price area, which is just above the 100-day moving average, and also the daily bearish trendline which is valid since early November.  

In the event that the current resistance level proves to hold and the price makes a bearish move, we might expect some support laying around the $75,50, which is a point just below the 23.6% of the Fibonacci.

Gold trading in a strong technical area on the chart

Gold against the US dollar (XAUUSD) was trading in a steady bullish momentum right up to the Fed meeting on 1 February. After the bull flag formation in early November, which is usually a continuation pattern in technical analysis, the price continued to rally before declining after some positive news on the Dollar last week.

The price of the “yellow metal” is slowly increasing after incurring losses following the sudden strengthening of the dollar. The current level of trading is a strong technical area.

The following sessions are important in determining the direction of the bullion in the short run. Investors and traders are keeping their focus on the major economic data of next week, specifically the US CPI, which is expected to create some volatility in the market especially around publication time.

On the technical analysis side, after the completion of the bullish flag formation in late November, the price continued its bullish rally until last week where the aggressive increase on the Dollar Index pushed the price of gold to the downside. 

Currently, the price is trading in a very strong technical area which consists of the 23.6% of the daily Fibonacci retracement level, the 50-day moving average, the lower band of the Bollinger bands, and also the Stochastic oscillator recording an extreme oversold level. 

If the combination of these indicators is found strong enough to support the price then the scenario of a bounce to the upside might be witnessed in the following sessions. In such a case, the first point of resistance may be around the $1920 - $1930 price area, which is made up of the 20-day moving average and also the daily bullish trendline, which is valid since early November. 

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.

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