Talking Points:

• Crude Oil Prices Rebound on a Weakened US Dollar
• Next Technical Resistance for Crude Oil is Found at $52.91
• Looking for more trading ideas for the US Dollar and Crude Oil? Read our 2017 Market Forecast

Crude oil prices remain volatile this afternoon, after initially trading towards weekly lows as the U.S. Energy Information Administration reported that crude inventories increased by 4.1 million barrels. Now prices are trading off of their daily highs at 52.65 despite this news. Much of this afternoons rebound directly correlates to a late day selloff in the US Dollar, and depending on how the US Dollar closes intraday it may continue to impact crude oil prices.

Technically crude oil prices remain bullish in the short term above previous resistance found at $51.66. The next key value of resistance for the commodity has been identified near $52.91. This value is represented in the graph below as a 61.8% Fibonacci retracement measured from the January 6th high of $54.92 to the January 10th swing low at $50.69. If prices retrace under this point, it opens crude oil to retest today’s daily lows. However if prices continue to trade higher, crude oil may then target the next retracement value found at $53.52.

(Created Using TradingView Charts)

Intraday, the US Dollar (Ticker: DXY) is currently testing new daily low at 101.29. This afternoons sharp move lower has completely negated any bullish momentum that the Index was building earlier in the session. Initially the US Dollar broke higher, above today’s R4 pivot found at 102.36. This move was been completely invalidated with the US Dollar trading back below today’s R3 pivot at 102.21. From this point, a complete reversal has been established with the US Dollar now trading downward below the S4 pivot found at 101.72.

For traders looking at a further bearish extension in the US Dollar, next support is found at 101.30. This point of support has been established graphically by extending the January 5th low. It should be noted that at that the US Dollar has already tested this point, but has failed to mount a significant breakthrough here. If the US Dollar continues to fall, we may continue to see an extended rally in commodities such as crude oil. However if the US Dollar remains supported near present values, it may mean that this afternoons crude rally may be short lived.

(Created Using TradingView Charts)

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