Analys från DailyFX
Crude Oil Price Forecast: Possibly The Most Encouraging Move of 2017
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Talking Points:
- Crude Oil Technical Strategy: Price bouncing off support (50/52) favors eventual upside
- Crude Oil Finds a Higher Floor
- Resistance set at corrective double top at $54.29/31 per barrel, evening star top
Strong OPEC compliance has led to a rally in the Crude Oil market with the group’s “secondary source,” showing a nearly 92% compliance rate from the cuts agreed upon production cuts that OPEC agreed to in late 2016. Despite the encouraging data regarding reduced supply, the Baker Hughes Rig Count rose by 8 for the fourth straight weekly gain to a total of 591 active rigs in the US.
There has been a credible view passed around that OPEC’s reduction in supply is being countered by the Shale Drillers in North America extending production as Oil remains comfortably above the $50/bbl level. While we have two competing fundamental developments with a reduction in OPEC production and an increase in US Shale Production, we have stability on the charts that could favor further upside.
The chart shows a polarity zone that once acted as resistance and now appears as price support. Given the historical developments when OPEC has cut production, which led to a ~565% increase from the 1999 cut and a 156% rally from the late 2008 production cut per Bloomberg, there is a reason to remain very optimistic as the price remains above the Ichimoku Cloud and the Polarity zone.
The Bulls would likely lose their confidence on a weekly close below the Daily Ichimoku Cloud that aligns with the 50% retracement of the November-January rally ($42.23-$55.21/bbl). A move above the $54.29/31 recent lower-high would encourage the view that wee could soon see Oil break higher. Another encouraging sign for Crude Bulls is that WTI 2nd-month implied volatility remains at lowest sinceOctober 2014.
From a positive correlation standpoint, USD/CAD remains inversely correlated with USOIL (CAD positively correlated to USOil over 20-days at +0.476) that would show that a breakdown in USD/CAD may also align with a break higher in USOIL.
D1 Crude Oil Price Chart: Crude Oil Volatility Is Subdued, Price Bounce From Support Favors Upside
Chart Created by Tyler Yell, CMT Courtesy of TradingView
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Key Levels Over the Next 48-hrs of Trading as of Friday, February 10, 2017
T.Y.
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
- Crude oil comment: US inventories remain well below averages despite yesterday’s build
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- Crude oil comment: Europe’s largest oil field halted – driving prices higher
- Crude oil comment: Mixed U.S. data skews bearish – prices respond accordingly
- Crude oil comment: Fundamentals back in focus, with OPEC+ strategy crucial for price direction
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