Oil, Natural Gas, and US Dollar Technical Analysis Amid Global Market Pressure

WTI crude oil (CL) continues to face downward pressure due to uncertainties stemming from tensions in the Middle East. These uncertainties revolve around the future of the Middle East conflict and the impact of the ongoing output cuts enforced by OPEC. OPEC and the IEA have lowered their global growth forecasts 2024, further affecting the oil market. These global pressures include geopolitical tensions, economic uncertainties, and central bank policies impacting energy and currency markets. The uncertainty in the oil market has also impacted natural gas (NG) prices, which remain under pressure.

The escalation of the Middle East crisis on a global scale has also impacted the US dollar index (DXY), along with a basket of major currencies. The US dollar has strengthened as a safe-haven currency. The increased demand for the dollar has placed upward pressure on the US dollar index, making it more expensive than other currencies.

Additionally, expectations of a moderate rate cut by the Federal Reserve in upcoming meetings have added uncertainty to the market. Oil and natural gas prices have come under pressure following the release of China’s CPI data, indicating deflation concerns. Meanwhile, the US dollar has broken a key resistance level, suggesting potential gains. The release of retail sales data on Thursday will further drive the US dollar index.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Bearish Pressure below 50 SMA

WTI crude oil continues to trade downward after breaking below the 50 SMA. Following a drop from the 200 SMA and a subsequent break below the 50 SMA, the price action suggests that prices will likely remain weak. The 50 SMA has crossed below the 200 SMA, signaling potential bearish momentum. Additionally, the RSI has dropped below the midline, further indicating bearish pressure in the oil market.

Oil 4-Hour Chart – Ascending Channel Pattern

The 4-hour chart for WTI crude oil also indicates bearish pressure. This is evident as the price trades below the ascending channel’s midpoint. It has also broken below the black trendline. Strong support for WTI crude is found at $67.30. However, RSI has entered the oversold region. Therefore, the price is likely to rebound from current levels.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bearish Pressure within Triangle Pattern

Natural gas prices remain under bearish pressure as they continue to decline after peaking on October 4th. The price is approaching the first minor support at the black line around $2.24, with major support at $2.08. The black support line also intersects with the 50 SMA at $2.28. Since the RSI has broken below the midline on the daily chart, the price may continue to decline toward $2.08.

Natural Gas 4-Hour Chart –Ascending Broadening Wedge

The 4-hour chart shows an ascending broadening wedge pattern formation during September 2024. This pattern was broken on October 9th, and prices have declined. The first support is $2.10, which also intersects with the strong support level of $2.08 on the daily chart. A break of the ascending broadening wedge pattern opens the door for a further drop toward $1.87. Therefore, a break below $2.08 could push prices to $1.87.

US Dollar Technical Analysis

US Dollar Daily – Breakout from 103.10

The US dollar has broken above 103.10 and entered a triangle pattern. The strong rally in the US dollar index is approaching the 200 SMA, which is likely to act as solid resistance. This resistance also intersects with a red trendline on the daily chart. This red trendline has a resistance of around 103.90. The RSI is now nearing the overbought region.

As the US dollar continues to rise toward the strong resistance at 103.90, the overbought conditions suggest that the index may face resistance in this area. If the 103.90 level holds, the US dollar index might return toward the triangle’s support line at 102.70.

US Dollar 4-Hour Chart – Bearish Divergence

The US dollar index breached the 103.10 level on the 4-hour chart and continues upside momentum. The RSI shows a bearish divergence, indicating a potential short-term top in the US dollar index. The daily chart’s strong resistance around the 103.90 area further validates this short-term top. The upcoming retail sales data on Thursday might serve as a key driver for the US dollar.