Oil & Natural Gas Technical Analysis: Energy Markets Show Signs of Rebound as USD Weakens

Key Points:

• WTI crude oil consolidates in the $64–$65 range as geopolitical tensions and trade risks weigh on global demand.
• Natural gas shows bullish patterns after bouncing from key support levels, indicating potential upside.
• A weakening US dollar and expectations of a Fed rate cut are fueling optimism in commodity markets.

WTI Crude Oil (CL) Consolidates Amid Geopolitical Tensions

WTI crude oil remains trapped in a consolidation phase between $64 and $65, as concerns about weak global demand persist. The market faces additional pressure following President Trump’s decision to double tariffs on Indian imports, targeting India’s refusal to halt Russian crude and defense purchases. This tariff hike signals potential disruptions in trade dynamics, heightening concerns about global oil demand.

However, geopolitical tensions, particularly in Eastern Europe, are offering some support to prices. Ukraine’s increasing attacks on Russian infrastructure in response to drone strikes, along with President Trump’s warnings about additional sanctions, have raised the risk of supply disruptions. These developments are helping to limit downside risks for oil prices.

WTI Crude Oil Technical Analysis:

• Daily Chart: WTI is consolidating near the $64 support, forming a potential rebound within an overall bearish trend. The 50-day SMA remains below the 200-day SMA, signaling continued downside pressure. A break above the $67 level could trigger a short-term rally toward $74, potentially pushing prices toward the $82–$84 range in 2025. However, a drop below $60 would likely bring $55.50 into play as the next immediate support level.
• 4-Hour Chart: WTI is forming an inverted head and shoulders pattern, suggesting a potential rebound toward $67 in the near term. The consolidation between $60 and $70 continues as the market awaits fresh directional cues.

Natural Gas (NG): Bullish Momentum as Key Support Holds

Natural gas prices are rebounding after finding strong support in the $2.60–$2.70 range. This price action follows the formation of a cup-and-handle pattern, which is often seen as a bullish signal. The immediate resistance is at the 50-day SMA, located at $3.17. A break above this level could push prices toward the $3.60 mark.

Natural Gas Technical Analysis:

• Daily Chart: The rebound from the $2.60–$2.70 support zone suggests that natural gas could see further upside. A breakout above $3.00 would bring the $3.60 region into focus.
• 4-Hour Chart: Natural gas prices remain in a consolidation range between $3.00 and $5.00. A successful break above $3.00 could pave the way for a move to $3.60, further strengthening the bullish outlook.

US Dollar Index (DXY): Bearish Pressure Mounts

The US Dollar Index (DXY) continues to trade within a bearish flag pattern, suggesting that further downside movement is likely. The dollar faces persistent weakness as traders brace for a potential rate cut by the Federal Reserve. The DXY is consolidating near the key support zone at 97.60, signaling that the index could break lower soon.

US Dollar Index Technical Analysis:

• Daily Chart: The DXY remains within a bearish flag, and a potential breakdown could trigger further declines. The 50-day SMA and the lower support line of the flag pattern mark the critical inflection zone for the dollar.
• 4-Hour Chart: The index is consolidating between the 97 and 99 levels, with a break below 96.50 likely triggering another sharp decline. Bearish price action remains dominant.

Conclusion:
The energy markets are showing signs of a rebound, with oil and natural gas finding support at key levels. The weakness in the US Dollar, combined with expectations of a Fed rate cut, provides an additional tailwind for commodities. However, geopolitical tensions and trade risks continue to cloud the outlook, keeping volatility high in the short term.

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