Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21
Dell S3220DGF Price CRASH to £305! 32 Inch 165hz Curved Gaming Monitor Amazon Bargain - 16th Jul 21
Google, Amazon and Netflix are Scrambling For This Rare Gas - 16th Jul 21
Sheffield Millhouses Park New Children's Play Area July 2021 Vs Old Play Area - Better or Worse? - 16th Jul 21
Inflation Soars, Powell Remains Unmoved. What about Gold? - 16th Jul 21
Goldrunner: Gold Could Jump To $1,900-$2,100 In Next 30 days – Here’s Why - 15th Jul 21
Tips For Finding The Right Influencers - 15th Jul 21
ECB Changed Monetary Strategy. Will It Alter Gold’s Course? - 15th Jul 21
NASA And Big Tech Are Facing Off Over This Rare Gas - 15th Jul 21
Will the U.S. Dollar Lose Momentum In the Second Half of 2021? - 15th Jul 21
Bitcoin Stock to Flow Model Forecasts Infinity and Beyond! - 14th Jul 21
Proteomics: The Next Truly Massive Investing Opportunity - 14th Jul 21
Massive Solar Storm to Hit Earth 2025, Coronal Mass Ejection (CME) Danger and Protection Solutions - 14th Jul 21
Is This The Best Way To Play The Coming Helium Boom? - 14th Jul 21
Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown - 14th Jul 21
How NFTs Are Shaking Up Arts Trading - 14th Jul 21
Gold: High Time to Move Out of the Penthouse - 13th Jul 21
Climb Aboard! Silver Should Run Up To $38 In Next 30 Days - 13th Jul 21
How Will Remote Work Impact the U.K. economy? - 13th Jul 21
Why Helium Stocks Are Set To Soar in 2021 - 13th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Crude Oil Price Time for Recovery?

Commodities / Crude Oil Jul 11, 2014 - 04:20 PM GMT

By: Nadia_Simmons

Commodities

On Thursday, crude oil gained 0.94% as profit taking and upbeat U.S. jobless claims data supported the price. As a result, the commodity bounced off a very important support zone and came back above $102 per barrel. Does it mean that the bottom of the recent correction is in?

Although crude oil hit a 2-month low of $101.55, declining to slightly below the June low, the commodity reversed and rebounded as traders who had bet on falling prices made purchases yesterday to close those positions.


Additionally, upbeat U.S. jobless claims numbers supported oil as well. Yesterday, the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending July 5 declined by 11,000 to 304,000, while analysts had expected jobless claims to hold steady at 315,000 last week.

As we mentioned earlier, because of these circumstances, light crude rebounded and came back above $102. Did this upswing change the technical picture of the commodity? Let’s check charts below (charts courtesy of http://stockcharts.com).

In our commentary posted on July 7 (and cited in the following days), we wrote:

(…) crude oil will extend the current correction and the initial downside target will be around $101.60, where the June low is. At this point it’s worth noting that slightly below this level is a strong support zone created by the 50-week moving average (currently at $101.26) and the lower line of the trend channel (and lower border of the blue triangle), which may pause further deterioraion.

As you see on the weekly chart, the situation developed in line with the above-mentioned scenario and crude oil tested the strength of the support zone. So far, it withstand the selling pressure, which resulted in a small (compared to the entire decline) corrective upswing. Although sell signals generated by the indicators remain in place, favoring oil bears, it’s quite possible that the medium-term support encourage oil bulls to not give up and we’ll see further improvement in the coming days. How high could light crude go? Let’s check the very short-term picture and find out where the nearest important resistance levels are.

Quoting our last Oil Trading Alert:

(…) In our opinion, the very short-term technical situation has changed from bearish to even more bearish as Tuesday’s upswing was nothing more than a verification of the breakdown. Therefore, it’s doubtful to us that we’ll see a rebound before a drop to (at least) $101.60, where the June low and the medium-term downside targets are. Please remember that you should keep an eye on the commodity in this area, because, as we have pointed out before, this support zone may pause further deterioration.

Yesterday, oil bears realized their scenario once again and crude oil tested the June low. As you see on the daily chart, this key level in combination with the proximity to the medium-term support zone triggered a corrective move, which took the commodity above the previously-broken 61.8% Fibonacci retracement. Although this is a bullish signal, the size of the upswing is too small to say that the very short-term picture has improved significantly. At this point it’s worth noting that the commodity didn’t even erase 23.6% of the recent declines, not to mention the invalidation of the breakdown below the blue resistance line. Nevertheless, taking into account the above-mentioned strong support zone and the fact that the CCI and Stochastic Oscillator are oversold, further improvement and a try to come back above the nearest resistance zone (created by the 50-day moving average and the previously-broken 50% Fibonacci retracement) should not surprise us. In our opinion, if it is broken, the commodity will likely increase to around $104, where the blue resistance line is. However, if oil bulls fail and light crude moves lower from here, we’ll see another test of the strength of the June low and the medium-term support zone.

Summing up, the highlight of yesterday’s session was a realization of the bearish scenario that we discussed at the beginning of the week. As a result, crude oil declined
to its downside target and, accordance with our yesterday’s assumptions, rebounded from that area. Does it mean that the final bottom of the recent correction is in? So far, we noticed only one-day rally, which didn’t change the short-term picture. Nevertheless, it’s quite likely that a local bottom is materializing right now as light crude reached the key support zone, which may translate to higher prices of crude oil. Therefore, we suggest closing short positions and taking profits off the table. Crude oil dropped quite nicely from $106.50 , which is the price at which we had suggested opening short positions on June 17, and it seems that cashing in the latest gains is appropriate.

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

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski
Founder, Editor-in-chief

Gold & Silver Trading Alerts
Forex Trading Alerts
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