OIL: Oil Outlook Still Bearish, Gains Corrective
Oil prices were higher on Friday supported by the fifth consecutive EIA-reported US crude drawdown and light volumes ahead of year end, which are likely to continue this week. Crude has been range trading for a number of months as various influences offset each other leaving benchmarks little changed in 2024. Geopolitical threats to oil supply persist, while the market continues to worry about a significant surplus in 2025.
- WTI rose 0.9% to $70.26/bbl after reaching $70.75 and is now up 3.8% this month but only 1% on the year. Recent gains continue to be seen as corrective with initial support at $66.01 and resistance at $71.97.
- Brent is 1% higher at $74.17/bbl following a high of $74.29. It is up 3% in December but down 0.5% in 2024. The technical outlook remains bearish with initial resistance at $75.79 and support at $69.95.
- Conflict in the Middle East has continued with Israel now focussing on the Iran-backed Houthi rebels in Yemen who have been targeting international shipping in the key Red Sea route.
- The strength of China’s oil demand has worried markets and while there is some optimism that increased stimulus in 2025 may boost it, the lack of details limited the upside to oil prices. US exports of crude to China fell 46% in 2024, according to Kpler, due to weak demand but also China shifting to other sources such as Iran and Russia.
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USDCAD TECHS: Pullback Appears Corrective
- RES 4: 1.4287 2.0% 10-dma envelope
- RES 3: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4196 1.764 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4078/4178 High Nov 27 / 26 and the bull trigger
- PRICE: 1.4005 @ 16:09 GMT Nov 29
- SUP 1: 1.3965/28 20-day EMA / Low Nov 25 and a key support
- SUP 2: 1.3858 50-day EMA
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
Trend conditions in USDCAD remain bullish and Tuesday’s fresh cycle reinforced this theme. The move higher confirmed a resumption of the primary uptrend and marked an extension of the bullish price sequence of higher highs and higher lows. Sights are on 1.4196 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. For now, the latest pullback appears corrective.
AUDUSD TECHS: Corrective Bounce
- RES 4: 0.6762 High Oct 9
- RES 3: 0.6733 High Oct 13
- RES 2: 0.6604/88 50-day EMA / High Nov 7 and a reversal trigger
- RES 1: 0.6534/50 20-day EMA / High Nov 25
- PRICE: 0.6512 @ 16:03 GMT Nov 29
- SUP 1: 0.6434 Low Nov 26
- SUP 3: 0.6400 Round number support
- SUP 3: 0.6350 Low Aug 5 and a key support
- SUP 4: 0.6339 Low Nov 10 2023
A bearish theme in AUDUSD remains intact. The fresh cycle low on Tuesday marks an extension of the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Scope is seen for a move towards 0.6350, the Aug 5 low and the next key support. The pair has recovered from its recent lows - a correction. Initial firm resistance to watch is 0.6534, the 20-day EMA.
EURJPY TECHS: Southbound
- RES 4: 167.40 61.8% retracement of the Nov 11 - Aug 5 bear leg
- RES 3: 165.04/166.69 High Nov 15 / High Oct 31 and the bull trigger
- RES 2: 164.76 High Nov 20 and a key short-term resistance
- RES 1: 160.71/162.58 High Nov 27 / 20-day EMA
- PRICE: 158.62 @ 16:01 GMT Nov 29
- SUP 1: 158.15 Low Nov 29
- SUP 2: 157.87 76.4% retracement of the Sep 16 - Oct 31 bull cycle
- SUP 3: 157.05 Low Sep 18
- SUP 4: 155.15 Low Sep 16 and a key support
EURJPY remains soft and the cross is again trading lower, today. The cross has cleared a number of retracement points and sights are on 157.87, the 76.4% retracement of the Sep 16 - Oct 31 bull cycle. A break of this level would strengthen a bearish theme and open 155.15, the Sep 16 low. Initial firm resistance to watch is 162.58, the 20-day EMA. A breach of this EMA is required to signal a reversal.
