Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend

Commodities / Crude Oil Sep 20, 2020 - 07:10 PM GMT

By: Nadia_Simmons

Commodities

At last, crude oil moved a bit higher, so you might be asking yourself if the trend has reversed or is this just a pause before the moves continue.

In short, we think the latter is much closer to the truth.

The fact remains that in a global and hyperconnected economy such as today, no market can sustain complete independence of the rest of the world. Crude oil, as the most versatile marketplace commodity, is not excluded from that reality.

Namely, the two markets that the black gold often looks up to the most are stocks and currencies. In today’s analysis, we’ll focus on the latter.

The black gold upswing has been relatively modest, and parallels with a similar pause in the USD Index. To validate this, let’s take a look at the following charts for more details.


Crude oil has barely corrected the 38.2% of the most recent decline, which already includes today’s pre-market move higher. However, this is quite far from a game-changer move.

In reality, this move higher resembles the brief early-March pop-up higher that preceded one of the sharpest declines that we saw over the past decades. The preceding decline's size was broadly similar as well, which only adds to the likelihood of this rally becoming a slide.

And what about the USD Index? Well, in recent times, the USDX and crude oil moved in the opposite directions.

In particular, this month’s decline in crude oil corresponded to USD’s rally.

Therefore, if the USD Index is resting, an eventual pause in oil wouldn’t be surprising as well.

As a matter of fact, that’s precisely what the USD Index has been doing for the last several days. It’s been moving lower, at approximately the same pace at which the declining medium-term resistance line is descending.

In other words, once the USDX finally does rally – even just a tiny bit – it’s likely to break above this important resistance and thus – rally much higher. After all, that’s what tends to happen after significant breakouts.

Would this indeed represent a major breakout? Of course. This line already stopped the USD rally in early July, so it was verified as something that should be considered. The fact that the USDX was unable to rally above it earlier this month is yet another proof.

So, the big question is - how does the above translate into crude oil action? Well, it indicates that the decline is likely to resume quickly, and that the profits of our short positions will grow further.

Let’s not forget that the aforementioned happened right after crude oil failed to rally above the 61.8% Fibonacci retracement and the early-2020 lows. The strong resistance stayed on – despite the positive influence that the general stock market should have had on the black gold. This means that the current move lower does indeed “have legs” – it’s not just a brief breather.

Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Sunshine Profits: Gold & Silver, Forex, Bitcoin, Crude Oil & Stocks
Stay updated: sign up for our free mailing list today

* * * * *

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.


© 2005-2022 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