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
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
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

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Breakthrough in Crude Oil Price Only A Matter Of Time

Commodities / Crude Oil May 12, 2014 - 06:57 PM GMT

By: Nadia_Simmons

Commodities

On Friday, crude oil hit an intraday high of $101.18 supported by ongoing concerns over tensions in Ukraine. Despite this improvement, the commodity reversed and lost 0.20% as weaker-than-expected economic data from China and a stronger dollar weighted on the price. Because of these circumstances, light crude erased earlier gains and temporarily slipped below the psychological barrier of $100 once again. Is it enough to trigger another sizable downswing?


At the end of last week, pro-Russia separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum and said they plan to go ahead on Sunday with a vote. These circumstances fueled concerns that Ukraine is descending into civil war and pushed light crude to around $101(as a reminder, in recent weeks, worries that higher tensions between Russia and the West over the unrest in Ukraine could lead to further sanctions, which could crimp Russian oil exports have kept oil prices above the level of $100). In reaction to this news, oil investors locked in their profits and jumped to the sidelines to await fresh news from Ukraine. As a result, the price of crude oil reversed and declined.

An additional bearish factor that weighted on investors' sentiment was soft Chinese pricing data released earlier on Friday, which showed that China's April consumer price index rose 1.8% year-on-year (missing expectations for a 2.0% increase). Additionally, the country's producer price index fell 2.0%, while analysts had expected a 1.8% drop.

On top of that, a stronger dollar pushed oil prices down as well. As is well known, crude oil is traded in dollars and a strong greenback makes the commodity more expensive to buyers using other currencies.

Once we know major fundamental factors that affected the commodity on Friday, let's find out what impact did they have on the technical picture of crude oil (charts courtesy of http://stockcharts.com).

Although crude oil gained 0.15% in the previous week (for the first time in three weeks), the medium-term situation hasn't changed much as the commodity still remains below the lower border of the triangle. Therefore, the bearish scenario from our Oil Traing Alert posted on Apr. 30 is still up-to-date:

(...) if the commodity extends losses and drops below the psychological barrier of $100, we will likely see further deterioration and a drop even to around $95, where the medium-term support line (based on the June 2012 and January 2014 lows) is. At this point, it's worth noting that the CCI and Stochastic Oscillator generated sell signals, which suggests that another attempt to move lower should not surprise us.

Are there any short-term signals on the horizon that could push light crude higher or lower in the near future? Let's zoom in on our picture and find out.

Quoting our last Oil Trading Alert:

(...) as long as the price remains above the key level of $100, another attempt to move higher should not surprise us. (...) if crude oil rebounds (and even comes back above the 200-day moving average - currently at $100.49), the resistance zone created by the 50-day moving average and the 38.2% Fibonacci retracement, will likely pause or stop further improvement once again.

As you see on the above chart, we noticed such price action on Friday. As a result, light crude declined and closed below the 200-day moving average for the second day in a row, which is a bearish signal. On top of that, we noticed another test of the strength of the psychological barrier of $100. So far, it holds, but what's next for crude oil? Technically, the commodity is currently consolidating between the the key support level and the above-mentioned resistance zone. Taking this fact into account, we think that as long as there is no breakout above the major resistance area (or breakdown below the level of $100) another sizable move is not likely to be seen. Please note that even if the commodity climbs above the resistance zone and reaches the next Fibonacci retracement (around $101.80), the breakdown below the major resistance lines and its consequences still will be in play.

Summing up, although crude oil moved higher and (very temporarily) broke above $101, the commodity reversed and closed the day below 200-day moving average once again, which provide us with bearish implications. Nevertheless, we still keep in mind that crude oil remains above the psychological barrier of $100. Therefore, if it holds after the market's open, we will see another attempt to break above the resistance zone (around $101.05-$101.13) created by the 50-day moving average and the 38.2% Fibonacci retracement (similarly to Friday's price action). However, if declines continue and crude oil drops below $100, we will likely see a pullback to the May low in the near future. Either way it still seems that we will see visibly lower crude oil values in the coming weeks.

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

Trading position (short-term): Short. Stop-loss order: $102.50.

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