Analys från DailyFX

WTI Crude Oil Price Forecast: Pulling a Trade from the Brent/ WTI Oil Spread

Published

9 år ago

22 december, 2015

DailyFX

WTI Crude Oil Price Forecast: Pulling a Trade from the Brent/ WTI Oil Spread

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Talking Points:

-Crude Oil Technical Strategy: Oil Finds Short-Term Support at Key Support

-Temporary USD Weakness Allows US Oil Downward Pressure to Subside

-RSI Wedge Could Precede Momentum Breakout

The pressure in Oil seems to be unrelenting. On Friday, the market got wind of the Baker Hughes rig count that jumped by 17 (meaning more production in an oversupplied market), and prices dropped yet again. The trend is definitively lower, but traders without exposure in the market may want to keep an eye on a few signs that a short-term bottom could be forming, at least for US Oil. While we often discuss the US benchmark for Oil, West Texas Intermediate Crude, the international benchmark for Oil recently broke below its 2008 low. The December 2008 low for Brent Oil was $36.20, and this week’s low was $36.05, $0.15 below the 2008 low.

A dynamic worth focusing on is that pressure could build on Brent that isn’t seen in WTI or US Oil. The reason for that is many, but one of the most interesting reasons is one-sided exposure. What has developed is that traders have shorted WTI US Oil to an extreme such that there are few longs left in the market, as you can imagine, a reversal often happens when all the sellers have exhausted their downside exposure, but that could now move to the global counterpart of Brent or UK Oil. The long exposure on Brent Oil could further unwind, and push the spread between US Oil UK Oil to parity such that the standard spread is brought down to zero. If there are more sellers to emerge on Brent or UK Oil, whereas the US Oil shorts are exhausted, there could be a rebalancing that brings US Oil higher, although not materially so for now.

Turning to the price of US Oil, you can see we have seemed to find a sticking point north of $33.50/bbl, the 2009 low. Just below there is the December 2008 low at $32.40. We will continue to focus on this price zone as support. However, there are other technical forces that may act as support for testing those levels.

First, you will notice that two key points are converging on two Andrew’s Pitchforks drawn off prior key pivots. The Red Pitchfork is drawn over a longer time-frame whereas the Black Pitchfork is more precise because the span of points is tighter and covers a smaller range. However, the median line of the shorter-term Pitchfork has aligned with, the lower parallel line of the longer term pitchfork at a point that additionally aligns with a Fibonacci 1.272% extension. This bounce off support is by no means enough to call a bottom in Oil, but rather a potential relieve rally back to the August 24th low December 15th high of $37.73-$37.86/bbl. End of year seasonal tendencies favors US Dollar weakness, which may support Oil further.

Lastly, you can see RSI (5) pushing on trendline resistance. A break higher could further show a relief rally is underway. Momentum has stalled to the downside, even as price pushed further down, which can indicate some reversal on the horizon. If RSI(5) does unwind, and a move higher develops, it would be worth keeping an eye on the resistance levels of the December 15th high, and move our sights to the $40.00/bbl level where we recently accelerated lower on December 7th. A break of $40.00 on a closing basis would be the first decent signal of a more significant turn, which aligns with an Elliott Wave count we have been tracking, that could see us test upper $50s in Q1 2015.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

8 år ago

30 september, 2017

DailyFX

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

8 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

8 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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

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