crude oil recorded a fifth consecutive increase on Friday, climbing from a low day 97.31 to a high of 100.26 just before closing the market - the largest gain for a day since 3 December 2013. the important question now is whether prices rallied despite a low non-farm payroll print or because of it, as this will impact the feasibility of a longer-term uptrend followed by prices remain above the century mark.
low printing NFP puts bumps on the account of the US recovery, and there is a risk that the market may be too optimistic about the prospect of growth in 2014, which should be " negative risk "and therefore we should see stock prices and risk correlated assets such as WTI lower position. This behavior was predictable seen when the initial reaction post NFP was a downward thrust towards 97.31. However, it should be noted that in the past (particularly widespread in early 2012), a number lower NFP effectively pushed higher risk trends as the market interpreted this as a higher probability of the Fed to intervene - which led to the announcement of QE3 in September 2012. Similar behavior was observed in 2013 after the Fed hinted at the possibility of tapering QE purchases that the market performed weaker than expected economic data as a risk for the Fed to keep stimulus as it is.
Time Table
as such, the lower than expected print NFP this time can round were interpreted as a bullish event especially as the new president of the Fed Yellen has taken and will make his maiden policy speech to the House on Tuesday. Market could be anticipated Yellen to stop the current pace of QE tapering given the weak growth prospects, resulting in a strong recovery of rising risk sentiment. Therefore, WTI actually moved higher because of weak NFP and we could see prices with the ability to move higher if Yellen indeed turned out to be favorable to the status quo.
This argument seems logical and there seems to be evidence as well - US stocks gained strongly; S & P 500 clock 1.33% higher, Dow Jones Industrial Average + 1.06% and Nasdaq 100 sensitive risk gained the most by 1.84%. On the other hand, the VIX fear index fell 11.26%, which shows that risk appetite is alive and is not limited to WTI Crude
However, other assets are not really of no agreement -. 10Y Treasury yields traded 1% lower but was essentially flat during the day following the opening slot. USD was lower (Dollar Spot Index DXY below 0.266%) but nowhere near the scale seen in inventories and WTI. Similarly, the gold that was up higher should be the stimulus speculation has moved up, but the gains are certainly pale in comparison to those observed by WTI.
Therefore, the claim that the QE speculation is back to take a little water, but we are still far from a full confirmation. As such, there is some degree of doubt, it is in fact an overreaction on the WTI, and the probability of bearish downturn increases the fundamental reasons for WTI is so high is still in doubt.
From the technical point of view, it is clear that the bullish momentum is overbought, and prices seem to be pulling less already before the high oscillation of December 27 was tested (see daily chart below) . If 100.0 round figure fail to hold, we could see significant decline to 98.5. However, if prices manage to hold above 98.5, the likelihood of a quick return to 100.0 and potentially higher becomes higher it will be strong inherent strength WTI crude testimony bullish.
Table Daily
The upward momentum in mid January continues, but the price will break 100.57 and preferably above 101.5 to assert a strong bullish conviction in the long term. Otherwise, it would mean that the decrease from August 2013 remains in play and the risk of a return of the bearish momentum towards 91.22 swing low is higher. . Nevertheless, it should be noted that we have avoided a stochastics bearish cycle signal with the push of Friday, and it would alleviate short-term downside pressure
Links:
GBP / USD - resistance level at 1.6450 off Beams
AUD / USD - resistance Level 0.0 Stands tall
EUR / USD - Facilitates resistance at 1.3650 Far
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