Oil, Natural Gas, and US Dollar Technical Analysis: Assessing Key Breakout Levels

After the mixed economic data, the US dollar index (DXY) corrects lower from the strong resistance of 107. The strong GDP growth of 2.8% and better-than-expected initial jobless claims suggest resilience in the US economy. However, durable goods orders grew slower than expected, reflecting some underlying caution. The Fed’s hawkish stance, with fewer expected rate cuts, supports the dollar’s strength. However, the market remains wary of prolonged high borrowing costs and their potential drag on economic growth.

On the other hand, WTI crude oil (CL) held steady at around $68.80. The ceasefire between Israel and Hezbollah eased geopolitical tensions, potentially reducing risk premiums. However, a surprise draw in US crude inventories of 1.844 million barrels supported prices. The holiday season may subdue market activity, consolidating markets within tight ranges.

Moreover, technical patterns and broader market sentiment influence natural gas (NG) prices. Strong seasonal demand has driven them to key technical levels, maintaining a bullish outlook. A breakout above $3.60 could ignite a rally.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Complex Triangle Formation

The daily chart for WTI crude oil shows that the price trades within a complex triangle formation. The initial resistance at $71, marked by the black dotted trendline, resulted in another drop. The price is currently consolidating within this triangle as it approaches the apex. A breakout above $79.90 would alleviate the bearish pressure. However, the overall outlook remains bearish, with the price trading below the 50-day and 200-day SMAs.

Oil 4-Hour Chart – Triangle Pattern

The 4-hour chart for WTI oil further highlights the triangle pattern, indicating that the price seeks a decisive breakout. A break above $71 would ease the immediate bearish pressure. However, the oil market remains in a consolidation phase.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Cup and Handle

Natural gas prices have formed a strong bullish pattern and appear poised to break above $3.60. The emergence of a cup-and-handle formation indicates a bullish outlook. The price is currently correcting from the one-year resistance level of this pattern. Immediate support lies at the neckline of the cup-and-handle formation at $3. If the price holds above $3, another strong rally will likely drive the price above $3.60.

Natural Gas 4-Hour Chart –Ascending Channel

The 4-hour natural gas chart shows that the price is correcting lower from the resistance of the ascending channel. Immediate support is located at the mid-level of this channel, around $3. The RSI has broken below the midpoint, indicating the potential for further downside in natural gas prices.

US Dollar Technical Analysis

US Dollar Daily – Correction from 1-Year Resistance

The daily chart for the US dollar index shows that the index has started correcting from the strong resistance level at 107. Immediate support is located at the red trendline near 105.60. The RSI is easing from overbought levels, and the 50-day SMA is approaching a potential crossover with the 200-day SMA. The US Dollar remains within its one-year trading range. The 107 level is the key resistance that must be broken to trigger upward momentum.

US Dollar 4-Hour Chart – Ascending Channel

The 4-hour chart for the US dollar index shows the formation of an ascending channel. The price hit the resistance zone at 107 and formed a head-and-shoulders pattern. The index is approaching the support level of 105.60, which aligns with the daily chart’s support level.