Analys från DailyFX
Crude Oil Price Extends Higher After Breaking Above Resistance
Key Takeaways:
- Crude Oil technical strategy: Switching bias from neutral to bullish, buying dips
- Brent (global oil benchmark) trades to highest price since July 2015
- RSI(5) on US Oil at highest level of 2017, showing momentum breakout
Happy days have arrived for the long–suffering Bulls of Crude Oil. Multiple Bullish signs are being confirmed with Monday’s price action on both the global benchmark, Brent Oil, and the American Oil Index, WTI Crude Oil. The technical ‘golden cross’ pattern is the most recent sign that good times are here for a while in the oil market as the 50-day moving average has traded above the 200-day moving average for the first time since 2016.
Long-term trend traders will look to a 50-day moving average cross above a 200-day moving average cross as a long-term sign of a Bullish market. While the event of the crossover of two long-term moving averages is exciting, entering at the time of the cross-over can lead you to enter at a temporarily extended price. The temporary extensionis also evidencedby the RSI(5), a momentum indicator, currently at its highest level of the year.
However, traders can look for pull-backs as opportune moments to buy a market that is working in a longer-term uptrend that corrects lower without disrupting the overall uptrend. Traders are likely keeping an eye on the spread between WTI and Brent Crude, which is trading at its widest spread since August 2015 at over $6 per barrel. There have been concerns that WTI is being influenced negatively by US EP whereas Brent is benefitting from the global demand pickup alongside the pullback in OPEC production.
Traders watching WTI Crude would do well to keep an eye to see if a pull-back in price is temporary as proven by holding above the $50/bbl mark. If $50/bbl becomes a new support level, we could see a rush of buyers enter back into the market. Earlier in the year, funds were excited about the prospects of an Oil recovery, but then they exited on failed attempts of the energy commodity to break out. It may be that they were right, just early. If so, they have the logic figured out, and they could turn flow into the energy market to see a new Bull trend establish itself.
As global oil demand forecasts shift higher, check out our free forecast on Crude Oil prices
Daily US Oil Chart: Breakout above resistance and sentiment favors approach to resistance
Chart Created by Tyler Yell, CMT
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Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com
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Contact and discuss markets with Tyler on Twitter: @ForexYell
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
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