Charts Of The Day: The stalled oil rally

Market Analysis / 4 Min Read
Milan Cutkovic / 24 Jun 2021

Highlights:

  • Oil rally stalls amid sanction removal rumors and OPEC+ production boost speculation
  • Can the Bank of England save the British Pound rally?
  • GBP/JPY is one to watch as it clears a major resistance zone and risk appetite improves
  • Copper regains some ground after coming under renewed pressure in the past week

Oil Markets

The Oil rally has stalled amid rumors that the U.S. may agree to lift oil sanctions against Iran and speculation that OPEC+ might look to boost its oil production in August. While an output hike by the organization does look likely, a deal between the Western powers and Iran is far from certain. The market reaction has been muted so far.

Despite some obstacles, further gains remain likely in the near-term as global demand is strong. The charts are also hinting at an extension of the rally, and Oil bulls have the upper hand as long as USOIL remains above $68 support. Imminent support is noted at $72.23, while buyers are likely to emerge in larger numbers in the support zone between $69.48 and $69.77.

GBP/USD

Can the Bank of England save the British Pound rally? The central bank is likely to strike a slightly more hawkish tone amid strong economic data and rising inflation. However, the sharp increase in new COVID-19 cases in the UK is a reminder that the pandemic is far from over, and that the recovery is strong, but at the same time also fragile. The BoE will likely highlight those risks.

Overall, the meeting could have a positive impact on the British Pound. GBP/USD bounced off the rising trendline from the 2021 low and is approaching the 1.40 resistance level. A clear break above this psychologically important figure could pave the way for a recovery rally towards 1.42.

GBP/JPY

GBP/JPY is another currency pair worth watching, as risk appetite improves. It recently cleared a major resistance zone at 153.47/77, which could pave the way for a rally towards 156.08. The Japanese Yen is losing its appeal as markets are back in risk-on mode, while a hawkish BoE could give the British Pound a major boost, pushing GBP/JPY above the recent high.

Copper

Meanwhile, Copper has been able to regain some ground after coming under renewed pressure in the past week. The bullish RSI divergence on the Daily chart is giving Copper bulls some hope, and with the broad uptrend still intact, the odds for a continuation of the rally remain fairly high. A break above $4.38 resistance could trigger momentum buying and push Copper towards the falling trendline from the 2021 high. The next notable resistance level would then be seen at $4.70, followed by $4.88.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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