Analys från DailyFX
Crude Oil Price Forecast: Pushes Into LT Resistance On Low Volatility
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Talking Points:
- Crude Oil Technical Strategy: Price trend support (50/52) favors eventual upside, watching resistance
- A Return of Liquidity Refreshes SP 500, Dollar and Oil Bulls
- Developing Themes Technical Views in The Commodity Landscape
The price of Crude Oil Continues to run up against long-term resistance when looking at the 2017 Opening Range High of $55.21/bbl and Andrew’s Pitchfork that is drawn off of three key pivots in 2015 and 2016. When looking at the long-term chart, the low volatility can be worrisome. We recently shared how last week; Crude Oil posted its lowest weekly trading range in 13-years.
The volatility has caused many to play a strangle options strategy that benefits off of lower volatility with an expectation over the next six months that price would remain between $45/65 per barrel. However, while we’re at resistance, we should be cognizant of the bullish forces behind the price of crude Oil.
The last two times OPEC cut production in 2003 and 2008; the price rose significantly over the following years. Additionally, as OPEC pulls back market supply, despite the US quickly gaining market share, we see Forward Prices in Crude Oil demonstrating that supplies should eventually tighten. We also saw this week a premium for the front-month contract relative to the 12-month contract, which is known as backwardation and happens when traders sell later months to lock in gains and can communicate a tightening in supply in the coming months.
The first chart speaks for itself as it shows that the price is moving into long-term resistance with little volatility. This doesnot equal a sell-signal but should be watchedif the price breaks below the lowermedian channel line. A sharp break below the shorter-term APF would argue that we’ve been knockedout of the current Bullish bias market. Conversely, a sharp move higher through the long-term Pitchfork Resistance could be another indication, along with the Forward Price data that we’re about to see a continuation of the persistent move higher. This wouldlikely turn many of the Strangle option trades unprofitable, but such is life in markets.
17-Month Chart Crude Oil: Andrew’s Pitchfork Applied
Below is the main chart that has had our focus as it has encouraged us to favor a drift higher. We recently broke above the key lowerhigh at $54.29 in the opening range of 2017. This happened on the breakout of the triangle pattern that also encouraged us to focus higher, and we’ll continue to do so until we break below key support of the Ichimoku Cloud near $48/bbl and the polarity zone of $50/52 that has long held our attention.
One other point on the chart below, keep an eye on RSI(5). We remain in Bullish Territory, but the RSI has been quiet, which aligns with the low price volatility. I am watching for a spike higher as that would likely be a long-term validation that the trend will continue, and we should keep our focus higher.
D1 Crude Oil Price Chart: Crude Oil Has Broken Above Pre-Defined Evening Star Resistance at $54.29
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 24, 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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