Crude prices arrive at major hurdles

8 March, 2016

As we had expected, Brent oil has managed to climb all the way to the top of its bearish channel at $39.50, thus achieving its highest price level for the year. At the time of this writing, it was struggling to push further higher, most likely because of profit-taking from the buy side. Undoubtedly, a lot of people are also still fundamentally bearish on oil given that record amounts of the stuff is being produced by the OPEC and inventories in the US are still at all-time high levels. In addition, most of the positive news that had been supporting oil may be well priced in now, including the expected deal between Russia and OPEC to freeze production at January’s record levels. That being said, if hopes for a deal turn into reality this month, oil will almost certainly show a positive reaction. Further potential gains will depend to a great degree on the market’s view about the supply situation in the US. Here, oil production has decreased somewhat in recent weeks and the consistent falls in the rig counts point to further declines in output. Another 8 oil rigs were idled last week, according to the latest Baker Hughes data. The active numbers of rigs are now at their lowest level since December 2009.В  So far however, US oil producers have proved to be far more efficient and resilient than expected. It remains to be seen if all the existing US oil companies will still be in business should oil prices remain this low for a long time. The market clearly does not believe this will be the case and/or expects to see a more balanced oil market later in the year. If this were not the case, surely WTI oil prices would have responded more meaningfully to news of the sharp 10.4 million barrel build in US oil inventories last week. Yet, WTI actually held its own pretty well and on Friday broke through the key 34.50 resistance level.

Oil price may well be just pausing for a breath here, though it wouldn’t surprise me if it was more than just that. But recent price action has been noticeably bullish. For example, the inset of the WTI chart shows several bearish-looking candlestick formations on the daily time frame at or near key resistance levels. Yet, there was no corresponding follow-though in the selling pressure. This correctly pointed to a breakout above the $34.50 level which occurred on Friday. Similarly, if we see no significant follow-through in the selling pressure from other key resistance levels then one should expect to see oil go to higher levels in the near term. At the time of this writing, WTI was testing the upper resistance trend of its falling wedge pattern (bullish) at around $36.60. It should be noted that a decisive break above this level would be a further bullish outcome, while a failure here may see US oil drop back to test the broken resistance at $34.50 – the short-term bias would then turn bearish if this level breaks on a daily closing basis.

The chart of Brent arguably shows an even more interesting picture. As mentioned, the London-based oil contract is testing the resistance trend of its well-established bearish channel at $39.50. The slow stochastics momentum indictor shows Brent may be heavily overbought in the short-term. But, like WTI, if we observe the behaviour of recent price action we will notice that the bulls are apparently gaining control. If the sellers fail to show up around $39.00 to $40.00 then this would be a very bullish outcome. In this case, Brent may initially rally towards $42.20 to $43.00, an area which was previously support and corresponds with the 38.2% Fibonacci retracement. On occasions, the markets can remain overbought a lot longer than would normally be the case. But if oil turns lower, it may go for a re-test of the $36.00 level, a break below which would be deemed bearish. The outlook will turn completely negative if the rising short-term trend line also breaks down.

Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...

Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...

Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

In the past 24 hours Bitcoin has lost -12.44% and reached $5498.45956811. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -1.1164% and is now at $1.13. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -18.23% and is now at $175.180921878. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
6FIBO GroupFIBO Group83%