Oil and Natural Gas Technical Analysis: Bearish Signals Amid Trade War Tensions

Oil prices dropped on Tuesday as concerns about a potential US–EU trade war weighed on market sentiment. Investors worry that rising tensions between the two major crude consumers will dampen economic activity and curb fuel demand growth. Brent crude oil (BCO) dropped to $67.95, while WTI crude oil (CL) dropped to $65.50.

The expiration of the August WTI contract added to short-term selling pressure. Since the June 24 ceasefire between Israel and Iran, oil markets have lacked clear direction. Fading supply concerns from the Middle East and rising output from producers have limited price gains. Brent and WTI oil have traded within tight ranges over the past few weeks.

Trade tensions have become the dominant factor, outweighing support from a weaker US dollar. A softer dollar typically boosts crude prices by making oil more affordable for non-dollar buyers. However, the threat of a 30% US tariff on EU imports by August 1 has increased fears of a broader slowdown. The EU is now preparing counter-measures, adding to uncertainty.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – High Volatility

The daily chart for WTI crude oil shows that the price is retreating from resistance near the 200-day SMA at the $69 level. It is now testing the 50-day SMA, and a break below the $64 area would signal further downside. The sharp moves in oil prices reflect heightened global volatility driven by escalating tensions in the Middle East, particularly the conflict between Israel and Iran.

WTI Oil 4-Hour Chart – Double Top Formation

The 4-hour chart for WTI crude oil shows that the price is consolidating within a descending broadening wedge pattern. A previous breakout from this pattern failed near the $77 resistance level, forming a double top before the price fell back into the wedge. The price is now retreating from the $69 resistance area and appears to be heading toward the $64 level. A break below $64 would likely trigger further downside.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Multiple Ascending Channel

The daily chart for natural gas shows that the price is trading within a bullish structure. However, after repeatedly failing to break above the $4.00 level in recent months, the price action is showing signs of bearish momentum. A break below the $3.00 level would indicate further downside toward the $2.70 area.

Despite this short-term weakness, the overall price structure remains bullish, supported by the formation of a cup-and-handle pattern. A drop in natural gas prices is likely before finding support around the $3.00–$2.70 zone, which could then initiate a new rally toward the $5.00 region.

Natural Gas 4-Hour Chart – Consolidation

The 4-hour chart for natural gas shows that the price is consolidating within a sideways range between the $2.90 and $4.70 levels. A break below $2.90 would invalidate the bullish price structure and signal further downside. Conversely, a break above $4.70 would confirm bullish momentum and open the door for additional upside.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Test of Resistance at 50-Day SMA

The daily chart for the US Dollar Index shows that it recently hit resistance at the 50-day SMA and has since moved lower. A break above the 99 level would clear the 50-day SMA and could trigger a move toward the 100.50 region. However, a break below the 96 level would signal further downside. The RSI has dropped below the 50 mark, indicating an increase in bearish momentum in the US Dollar Index.

US Dollar 4-Hour Chart – Breakout from Descending Channel

The 4-hour chart for the US Dollar Index shows that the index is consolidating after breaking above a descending channel. A break below the 97 level would suggest that the index has re-entered the channel, potentially triggering further downside toward the 96 level.

A break below 96 would signal strong bearish pressure, opening the path toward the 90 area. On the other hand, a break above 100.50 would invalidate the bearish outlook. The index is currently consolidating below the 50-day SMA, awaiting a clear directional move.