Analys från DailyFX
Crude Oil Price Forecast: Price Test of Key Zone As Positions Swell
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Talking Points:
- Crude Oil Technical Strategy: Price remaining above support (50/52) favors eventual upside
- COT-Crude Oil Record Spec AND Hedger Positions
- Resistance set at corrective double top at $54.29/31 per barrel, evening star top
Crude Oil has become the poster-child for low volatility. As we head into the second week of trading in February, we have yet to break out of the macro opening range set in the first two weeks of January. The macro opening range high on January 03 is $55.21/bbl and the macro opening range low on January 11 is $50.75/bbl.
Given the extreme positioning divergence between speculators and hedgers, it is worth waiting to see which level, support or resistance will break. Should either level give way, and one side of the market fail to hold their position and reverse, we could see a strong follow through. In addition to the extreme positioning as displayed on the chart below, the Oil market is sitting at extremely low volatility right now, and the price is above long-term support near $50/52 per barrel.
Crude oil – new week and new record position
Image Source: COT-Crude Oil New Week and New Record
The belief that low volatility begets high volatility or stability begets instability will likely have a chance to prove itself in the crude Oil market. After the post-OPEC cut confirmation in late November followed by non-OPEC cuts in early December, the price has been flat. However, the active economic backdrop has led to large bets being placed on the next big swing. The low volatility causes me to discount the current move down to support. Only a break below $50/bbl on increasing volatility per ATR(5) on the Daily chart would seem to indicate a large reversal of the February-January retracement is in the works.
The chart support that the price currently sits above is the daily Ichimoku Cloud, Andrew’s Pitchfork, and polarity zone. None of these should be taken lightly, and the confluence of the three shows me that the burden of proof remains on the bears. A failure to break below this zone of support would favor a continuation of the choppy uptrend with a possible capituation of the sellers getting out of the trade providing a boost for longs toward the lower $60-target that I’ve long favored on the retracement of the 2014-2016 breakdown.
D1 Crude Oil Price Chart: Crude Oil Volatility Is Subdued, Price Above Support Favors Upside Bias
Chart Created by Tyler Yell, CMT Courtesy of TradingView
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Key Levels Over the Next 48-hrs of Trading as of Tuesday, February 07, 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.
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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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