Analys från DailyFX
WTI Crude Oil Price Forecast: $30 Acting Like Strong Price Support
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Talking Points:
- Crude Oil Technical Strategy: Oil Trying To Find Footing Around $30, Providing ST Upside
- The Offered US Dollar Further Puts Support Under Oil’s Advance
- WTI Is Starting To Divorce From Leading Risk Sentiment, Which May Support US Oil Bulls
Have We Found Our Floor?
Oil ended Monday’s trading day right around $30. However, the continued pain in equities is no longer being led by Oil nor is Oil being driven lower by the risk sentiment, which has turned markedly lower as Bank CDS are trading at their highest levels in the last 12 months, and JPY is at 14 months highs.
In the midst of this unfavorable environment, Oil is now looking supported around the $30 level, which could stop the proverbial bleeding in one of the worst hit commodity markets. Unfortunately, the glut of supply remains and will likely remain a cap on prices, however with a potential floor in place at $30, we may have a reason now to focus on where a ceiling of the price might be found.
US Oil Has Found an Intermediate Floor around the January 21 Daily Range
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Key Levels from Here
For now, the key price resistance is the late January high of 34.79. If the price can close above that level, the focus will turn to the opening range high for 2016 in Oil of $38.36. The larger support is identified as the price range of January 21 at $27.85-30.22 should support price, however, the specific level is the pivot low on January 26 of 29.23.
Bear markets have some of the most aggressive rallies that can put short sellers on the sideline until a new narrative takes over the market or the outlook darkens. The ~26% rally off the January 20 low appears to have taken the appetite for new lows out of the market. However, it’s important to be aware of the potential for a sideways consolidation or price triangle formation that would likely end in a retest of the January 20 lows.
The triangle consolidation pattern mentioned above would keep price trapped between the late January high of 34.79 and the support mentioned above at 29.23 for a few more weeks. Put another way, if price is unable to break above 34.79 the imminent downside threat is removed, but the probability of a new low remains higher over the next month or two.
Sentiment Flip Warns of Further Long-Term Downside
In addition to the technical pressure that Oil may have found a short-term support zone around the January 21 price range, the larger bearish view aligns with our Speculative Sentiment Index or SSI. Our internal readings of Oil are showing an SSI reading of 2.337.We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are now bullish provides a contrarian signal that US Oil may continue eventually lower.If the reading were to turn negative again, and the price broke back above $34.79bbl, we could begin looking for a retest of the YTD high of $38.36.
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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