Analys från DailyFX
Crude Oil Price Forecast: Oil’s Impressive Polarity Zone Pivot
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Talking Points:
- Crude Oil Technical Strategy: USOIL break from diagonal has seemingly found support near ~$50
- Saudi Arabia’s oil minister Al-Falih has said they “already exceeded” participation in OPEC deal
- USD weakness providing additional lift for USOIL
The price of Crude Oil (CFD: USOil) appears to have found support at a crucial zone we’ve long focused on as a few fundamental and Intermarket points lend a hand to Crude Oil Bulls. The zone we’ve been watching is the price range of June 9 that extends from 50.35-51.72/bbl. The reason that this zone has found significance is that it comprises the daily range of an extreme day that has since acted as critical resistance and has recently been tested as support.
A key tenet of Technical Analysis that looks for observed behavioral changes from traders is when old resistance becomes new support. Such a zone is known as a polarity point and is shows a transition of a market view from a view of, ‘it’s not worth bidding through that level,’ to, ‘it’s not worth letting it fall below that same level.’
In our recent pieces, we’ve focused on a developing wedge pattern from the November low that was part of a ~30% move higher in Oil over nearly twomonths of trading. From a technical viewpoint, Oil has given us a clear zone of support and resistance, which will be helpful for building a bias going forward. Regarding support, we can use the polarity zone that is highlighted on the chart below and explained above. Regardingresistance, we can utilize the top of the Evening Star reversal pattern with resistance at $54.29.
The rising wedge pattern, which in the market context could either be an ending diagonal, which would favor an aggressive break below $50 followed by further downside or a leading diagonal would be favored as leading if we got a daily close above $54.29. A leading diagonal would be the most Bullish outcome for Oil if played out in a traditional manner where a small retracement against the direction of the diagonal is preceded by an aggressive move higher.
The recent weakness in the US Dollar that we’ve also been discussing and the fundamental backing from Saudi Arabia could also align with higher Oil prices in the near term.
D1 Crude Oil Price Chart: Crude Oil Volatility Shows Initial Bounce Off Prior Resistance
Chart Created by Tyler Yell, CMT Courtesy of TradingView
Key Levels Over the Next 48-hrs of Trading as of Thursday, January 12, 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
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- All eyes on OPEC V8 and their July quota decision on Saturday
- Brent steady at $65 ahead of OPEC+ and Iran outcomes
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