Oil and Natural Gas Technical Analysis: Fed Rate Cut and Demand Concerns Weigh on Prices

Oil prices dropped from resistance after the Federal Reserve decided to cut interest rates by 25 basis points. The move was widely expected and already priced in by the markets. Traders shifted their focus to economic data, where weak labour market signals raised concerns about demand.

On the other hand, supply risks provided some support from key technical levels but failed to lift prices meaningfully. Ongoing geopolitical tensions in Russia-Ukraine and the Middle East have added uncertainty to the oil market. Ukrainian strikes on Russian refineries, along with pipeline issues in Kazakhstan and Nigeria, have intensified concerns. However, expectations of oversupply toward the year-end and rising U.S. distillate inventories have capped the bullish momentum.

WTI crude oil is consolidating below the $65 level, while Brent crude oil is holding below $68. This consolidation reflects price uncertainty and introduces selling pressure in the market. If oil prices fail to move higher in the coming days, a break below key support levels could trigger renewed bearish momentum.

WTI Crude Oil (CL) Technical Analysis

WTI Oil Daily Chart – Consolidation

The daily chart for WTI crude oil shows the price consolidating at the edge of an ascending channel below the 50-day SMA. This consolidation reflects uncertainty and signals that a break below $60 could trigger negative momentum. On the other hand, a break above $67 at the 200-day SMA would maintain bullish momentum and push prices toward the $75 region.

WTI Oil 4-Hour Chart – Consolidation

The 4-hour chart for WTI crude oil shows the price consolidating between $61.60 and $65.50. As long as the price stays below $70, the outlook remains bearish. A break below the $61.60–$60 region would reinforce bearish momentum in oil prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bullish Construction

The daily chart for natural gas (NG) shows a rebound from the long-term support at $2.60, signalling bullish momentum. The price is now breaking above the 50-day SMA and appears to be targeting the 200-day SMA near the $3.50 level.

A break above the 200-day SMA would confirm the bullish trend and open the path toward the $5 region. As long as the price holds above $2.60, the outlook remains positive. Moreover, the RSI remains above the mid-level, further supporting the upward momentum in natural gas prices.

Natural Gas 4-Hour Chart – Bullish Construction

The 4-hour chart for natural gas shows the price forming a bottom near the $2.60 support level and gaining positive momentum above it. A break above $3.80 would confirm the inverted head and shoulders pattern and support a continued bullish trend. The chart also highlights the $2.60 to $2.90 zone as strong long-term support, suggesting that prices are likely to trend higher from this base.

US Dollar Index (DXY) Technical Analysis

US Dollar Daily Chart – Key Reversal

The daily chart for the U.S. Dollar Index shows that the index has broken below a bear flag pattern and continues to decline toward the long-term support at the 96 level.

However, it failed to break below this support and formed a key reversal candle following the Fed’s interest rate announcement. This reversal suggests that if the index breaks above 97.50, it could regain momentum toward the 50-day SMA at the 98.10 level. However, as long as the index remains below 98.10, the downside pressure is likely to continue.

US Dollar 4-Hour Chart – Rebound

The 4-hour chart for the U.S. Dollar Index shows a reversal after hitting the 96.50 support level. If the index stays below 97.20, the next move could be lower. However, a break above 97.20 would bring the index back into the consolidation range between 97.00 and 98.00.

The recent rebound is driven by an extremely oversold short-term condition, as indicated by the RSI. As long as the index remains below the 98.00 level, the downside bias is likely to continue.