Crude Oil Tests Major Support Amid US Manufacturing News
FXOpen
The price of crude oil inched lower on Wednesday, dragging the value of West Texas Intermediate (WTI) to less than $47 a barrel. The technical bias remains bullish because of a higher high in the recent upside rally.
Technical Analysis
As of this writing, the price of crude oil is hovering around $46.41 a barrel. A support may be noted near $46.36, the horizontal support area ahead of $43.30 in medium term which is the swing low of the last major downside move.
On the upside, the black gold is expected to face a hurdle near $48.14, the horizontal resistance ahead of $49.39, another major swing resistance and then $52.22, the high of the last major upside rally as demonstrated in the above daily chart. A break and daily closing above the $52.22 resistance shall incite renewed buying interest, validating a move towards the $60 in the long run.
US Manufacturing PMI
A gauge of U.S. factory activity rose in October, a sign the manufacturing sector could be stabilizing after two years of challenging conditions. The Institute for Supply Management on Tuesday said its purchasing manufacturers’ index rose to 51.9 in October from 51.5 in September. A reading above 50 indicates that factory activity is growing, while a reading under 50 signals contraction. Details of the report were mixed. The index for new orders dropped, but those for production and employment both rose.
Trade Idea
Considering the overall technical and fundamental outlook, buying crude oil around current level could be a good strategy if we get a valid bullish reversal candle on the daily chart. Alternatively, selling below $46.86 can also be a good strategy as we highlighted major levels above.
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