The next step bearish oil cycle appears to have begun, with prices that threatens to break the 103.0 support and invite more fresh bear to push the sub 100.0 levels. Stochastic readings agrees, giving us a down cycle signal with two signal lines and Stoch crossing below 80.0. The fundamentals of the decline is also - more Syrian conflict, the nuclear crisis in Iran seems to have somewhat reduced, the global economy continues to look tentative, etc. In addition, prices have been pushed up by speculators unusually high during the peak of the Syrian unrest, where it is reasonable that the sell-off is equally, if not more fierce than accumulation.
Weekly Chart
from a technical point of view, the ultimate downside target would be around 80.0, 85 , 0, 99.0 and 100.0 provide important support along the way. Failure to break 103.0 this week does not necessarily invalidate the overall decline of perspectives, but it is possible that the major breakthrough of decline may be delayed especially if the soft resistance of 105.0 is exceeded.
Time Table
short-term chart is less generous, with price action suggesting a violation of 104 5 may be enough to bring prices up to 105.0 and beyond. However, that being said, the overall downward pressure will not be invalidated unless pushed prices beyond a new 109.0. But this seems to be a remote possibility, since the stochastic readings are now deep in the overbought region. Short term momentum favors a new test 104 which will lead prices to 103.0 and potentially beyond if the level mentioned above is broken.
Department of the weekly crude inventory stock today energy data can provide additional downward pressure if the figures reflect a lower than expected in implied demand. This is especially true when one considers that the data from the American Petroleum Institute yesterday showed a slight decline in stocks of only 54k barrels when analysts expected a decline of 1.5 million. Therefore, it is likely that the DOE numbers reflect the same missed. However, it should be noted that the price of crude oil actually ended up trading higher late in the US session, even if the global risk appetite was low as shown by stocks. The reason for the surprise rally is most likely because of the huge number of gross technical buying bulls when 103.0 was tested. Is this happens again tonight? This is everybody thinks, so traders should not automatically assume that just goes 103.0 reversal easily, even if the number turns bearish DOE. If DOE numbers proved to be optimistic, but prices remained capped below 105.0 and preferably below 104.5, it will be an affirmation of the strong underlying bearish sentiment that gives us a better chance to break short-term 103.0.
Links:
GBP / USD - continues to count on the support at 1.60
AUD / USD - drifts in One Week Low below 0.94
EUR / USD - continues to drift slowly lower below 1.35
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