Analys från DailyFX
Crude Oil Price Forecast: IEA Supply Surplus Weighs on Crude
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Talking Points:
- Crude Oil Technical Strategy: Short Bias Remains As Falling Resistance Holds
- Dollar Resilience This Month Makes Oil Bulls Doubtful of Shot-Term Upside
- Contrarian Sentiment System Now Favors Further Downside Risk
Regardless of the story that is building below the surface, if the market respects resistance so should you. The chart that we’ve shared with you (more on that below) has persistently shown an inability of the market to trade at a higher high above $50/bbl. Should such a development take place, then the outlook would change to a Bullish outlook. Until then, it has paid to sell rips.
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One key component of Oil’s weakness is demand and US dollar. When the US Dollar weakens, and stories abound that demand relative to supply is picking up, the market ticks up as well. However, when the US Dollar, which is the currency Oil is priced in, strengthens and the stories start to turn to oversupply relative to demand Oil tends to turn lower.
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Over the last 24-hours, we’ve heard from the IEA that the Surplus glut that has been aided by fracking technology in the US and aggressive supply in struggling OPEC economies like Saudi Arabia may be around longer than originally anticipated. The IEA forecast aligns with another announcement by the IEA that Saudi Arabia has overtaken the U.S. as the world’s largest producer.
After the IEA’s comments that Oil’s oversupply on a global scale may persist well into 2017, traders will turn their attention to the API DOE inventory data as well as risk sentiment. If risk-off returns alongside increasing supply that would validate the IEA forecast, we could soon see a return to support at the 200-DMA.
D1 Crude Oil Price Chart: Pressure On Bearish Channel (Red) Likely To Guide Bias Moving Forward
Contrarian System Now Favors Downside Risk as of 9/13/16
The chart above is simple, and very telling at the same time. There are three indicators on this chart of a 200-Day Moving Average as well as a Bullish Bearish Andrew’s Pitchfork. For now, the key drivers appear to be the Bearish (Red) Andrew’s Pitchfork where resistance sits at ~$49/bbl and the 200-DMA at $40.84/bbl.
Given the recent US Dollar strength, which is emerging vs. commodity FX like the Canadian Dollar and Emerging Market currencies like the Mexican Peso we could continue to see a move toward the 200-DMA.
Short-term support remains at the September opening range low at $43.02/bbl. A break below there would turn the focus to the 200-DMA. Short-term resistance favors the September opening range high at $47.71/bbl. From a Global Macro perspective, we may continue to see more stories favoring support being tested.
In addition to the technical focus, we should keep an eye on retail sentiment as the downside is beginning to align with our Speculative Sentiment Index or SSI for now.
As of midday-Tuesday, the ratio of long to short positions in the USOil stands at -1.07, as 48% of traders are long. Yesterday the ratio was -1.15; 47% of open positions were long. Long positions are 5.8% higher than yesterday and 37.6% below levels seen last week. Short positions are 0.9% lower than yesterday and 16.9% above levels seen last week. Open interest is 2.3% higher than yesterday and 7.2% above its monthly average.
We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives a signal that the USOil may continue higher. The trading crowd has grown less net-short from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further mixed trading bias.
Key Levels Over the Next 48-hrs of Trading As of Tuesday, September 13, 2016
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
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You can follow Paul on Twitter at@PaulRobinonFX.
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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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