Analys från DailyFX
Crude Oil Price Forecast: September Low Halts Decline
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Talking Points:
- Crude Oil Technical Strategy: Short Bias Remains As Falling Resistance Holds On Strengthening USD
- Supply and Demand Imbalance Fix At Algiers Could Trigger LT Bullish Head Shoulders Pattern
- Contrarian Sentiment System Now Favors Further Downside Risk
A likely rise in Oil exports and the continued rise in global supply relative to demand has continued to grip the world’s focus and put pressure on the price of Oil down toward the September low of $43.02/bbl. Recent stories on stories of Libya and Nigeria restoring production are further putting attention on the September 27 Algiers OPEC Meeting.
If Algiers passes without an agreement to cap production from Saudi Arabia, now the world’s largest exporter again then oversupply will continue to be a worry that could keep the price of Oil below $50/bbl.
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One upside into balancing global supply and demand imbalance appears to be China’s plans to build their strategic oil reserves, but there is a likelihood that this will not be enough to support the Oil market if the US Dollar continues to trade higher or if OPEC is unable to reach a production-cap agreement in Algiers.
Track short-term Crude Oil price levels and patterns with the GSI indicator!
TradingView D1 Crude Oil Price Chart: Head Shoulder’s Bullish Pattern Still Validating
Contrarian System Now Favors Downside Risk as of 9/13/16
The chart above is simple has competing stories. First, the head and shoulders is a classic bullish price pattern that fails to play out as often as newer traders would hope. However, it’s unwise to show that after an extreme low in February, the market has recovered aggressively and is now sitting close to long-term price channel resistance and sitting above the 200-DMA at $40.91/bbl.
The key drivers appear to be the Bearish (Red) Andrew’s Pitchfork where resistance sits at ~$48.50/bbl and the 200-DMA at $40.91/bbl.
Given the recent US Dollar strength, which is emerging against 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. A supportive component of US Dollar strength appears to be USD Funding costs on the international interbank stage that are shown with 3M USD LIBOR currently at 7-year highs.
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-Thursday, the ratio of long to short positions in the USOil stands at 2.29 as 70% of traders are long. Yesterday the ratio was 2.11; 68% of open positions were long. Long positions are 7.0% higher than yesterday and 44.8% above levels seen last week. Short positions are 1.6% lower than yesterday and 37.9% below levels seen last week. Open interest is 4.3% higher than yesterday and 11.5% above its monthly average.
We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives a signal that the USOil may continue lower. The trading crowd has grown further net-long from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bearish trading bias.
Key Levels Over the Next 48-hrs of Trading As of Thursday, September 15, 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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