Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19
Betting on Next British Prime Minister Tory Leadership Betfair Markets Forecast - 10th June 19
How Can Stock Market Go Up When We’re Headed Towards a Recession? - 10th June 19
If You Invest in Dividend Stocks, Do This to Double Your Returns - 10th June 19
Reasons for the Success of the Dating Market - 10th June 19
Gold Price Trend Analysis - Video - 10th June 19
US Stock Markets Rally Hard – Could Another Big Upside Leg Begin? - 10th June 19
Stock Market Huge Cosmic Cluster Ahead: Buckle Up! - 10th June 19
Stock Market Higher To Go? - 10th June 19
The Gold Price Golden Neckline… - 10th June 19
Gold Price Seasonal Trend Analysis - 9th June 19
The Fed Stops Pretending - 9th June 19
Fed Rate Cuts Soon; Bitcoin Enthusiasts Join Wall Street in Bashing Gold - 9th June 19
1990s vs. 2010s - Which Expansion Will be Better for Gold? - 9th June 19
Gold Price Trend Analysis, MACD, Trend Channels, Support / Resistance - 8th June 19
Gold Surges Near Breakout - 8th June 19
Could Gold Rally Above $3750 Before December 2019? - 8th June 19
5 Big Lies About Precious Metals Investing Exposed - 8th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Oil Trading Alert: Crude Oil Price Extends Declines

Commodities / Crude Oil Feb 04, 2014 - 05:03 PM GMT

By: Nadia_Simmons

Commodities

On Monday, crude oil lost 0.84% as weaker-than-expected U.S. and Chinese economic data fueled concerns over crude oil demand. Thanks to this news, light crude closed the day below $97 for the first time since Jan 27.

Data released over the weekend showed that China's Manufacturing Purchasing Managers' Index dropped to a six-month low, falling to 50.5 in January from 51.0 in December. This weaker-than-expected numbers raised questions about economic growth in the world's second largest oil consumer (after the U.S.) and weighted on the price of light crude.



On top of that, yesterday's data showed that U.S. manufacturing PMI dropped to 53.7 in January (from December's 55.0). Additionally, the Institute for Supply Management said that its manufacturing purchasing managers index fell to 51.3 in January (a seven-month low), while analysts expected the index to moved down to 56.4. The above data added to recent worries about weakness in emerging markets and fueled concerns over crude oil demand sending crude oil below $97.

Having discussed the above, let's move on to the technical changes in the crude oil market (charts courtesy of http://stockcharts.com).



In our last Oil Trading Alert, we wrote:

(...) crude oil extended its decline and (...) slipped below the previous high, which is not a positive signal - especially when we take into account the fact that Friday's drop materialized on relatively large volume. On top of that, the CCI and Stochastic Oscillator are overbought and close to generating sell signals. Connecting the dots, it seems that a bigger pullback is just around the corner.

As you see on the above chart, crude oil extended losses and approached the 50-day moving once again. If this strong support encourages buyers to push the order button, we will likely see a corrective upswing in the coming days. However, if it is broken, we will see further deterioration and the next downside target will be the Jan.27 low at $95.21. At this point it's worth noting that yesterday's downswing materialized on large volume, which confirms the strength of the sellers. Additionally, the CCI and Stochastic Oscillator generated sell signal, which supports the latter scenario.

Having discussed the current situation in light crude, let's take a look at WTI Crude Oil (the CFD).



Quoting our last Oil Trading Alert:

(...) the CFD formed a bearish engulfing pattern (...) such candlestick formation triggered a strong sell off at the end of December. From this perspective, it seems that if oil bulls do not manage to invalidate this bearish pattern, we may see similar price action in the coming days (...) the CCI and Stochastic Oscillator generated sell signals, which is another bearish sign (we saw similar situation in previous months and back then it had a negative impact on the price). Please note that the nearest support is the 50-day moving average (currently around $96.37), which corresponds to the Jan.29 low.

Looking at the above chart, we see that WTI Crude Oil extended its decline, dropped below the 23.6% Fibonacci retracement level and reached the 50-day moving average. As you see on the daily chart, this strong support encouraged oil bulls to act and triggered a small (at least at the moment when these words are written) corrective upswing earlier today. Despite this growth, the CFD still remains below the previously-broken 200-day moving average, which serves as resistance. Additionally, sell signals remain in play supporting the bearish case.

At this point, we should consider two scenarios. On one hand, as long as the CFD remains above the 50-day moving average, further declines are limited and we may see another attempt to move higher (even to the 200-day moving average). On the other hand, we should keep in mind that oil bears have more favorable factors on their side and if the 50-day moving average is broken, we will see a drop to (at least) the 38.2% Fibonacci retracement level based on the recent rally.

Summing up, the situation has deteriorated as the CCI and Stochastic Oscillator generated sell signals and crude oil declined (on large volume) to the 50-day moving average. As mentioned earlier, if this strong support encourages oil bulls to act, we will likely see a corrective upswing in the coming day (or days). However, if it is broken, we will see further deterioration and the next downside target will be the Jan.27 low at $95.21. Please note that the current situation in the CFD is similar to what we noticed in the case of light crude, and WTI Crude Oil doesn't give us any particular clues about future's moves in crude oil. Nevertheless, in both cases oil bears have more favorable factors on their side and it seems that further deterioration is just around the corner.

Very short-term outlook: mixed
Short-term outlook: bullish
MT outlook: bullish
LT outlook: mixed

Trading position (short-term): In our opinion, there were no significant changes in crude oil that justify opening short or long positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons

Sunshine Profits‘ Contributing Author

Oil Investment Updates
Oil Trading Alerts

* * * * *

 

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules