Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Bubble 2025 - 11th Feb 25
Fed Interest Rate Cut Probability - 11th Feb 25
Global Liquidity Prepares to Fire Bull Market Booster Rockets - 11th Feb 25
Stock Market Sentiment Speaks: A Long-Term Bear Market Is Simply Impossible Today - 11th Feb 25
A Stock Market Chart That’s Out of This World - 11th Feb 25
These Are The Banks The Fed Believes Will Fail - 11th Feb 25
S&P 500: Dangerous Fragility Near Record High - 11th Feb 25
Stocks, Bitcoin and Crypto Markets Get High on Donald Trump Pump - 10th Feb 25
Bitcoin Break Out, MSTR Rocket to the Moon! AI Tech Stocks Earnings Season - 10th Feb 25
Liquidity and Inflation - 10th Feb 25
Gold Stocks Valuation Anomaly - 10th Feb 25
Stocks, Bitcoin and Crypto's Under President Donald Pump - 8th Feb 25
Transition to a New Global Monetary System - 8th Feb 25
Betting On Outliers: Yuri Milner and the Art of the Power Law - 8th Feb 25
President Black Swan Slithers into the Year of the Snake, Chaos Rules! - 2nd Feb 25
Trump's Squid Game America, a Year of Black Swans and Bull Market Pumps - 24th Jan 25
Japan Interest Rate Hike - Black Swan Panic Event Incoming? - 23rd Jan 25
It's Five Nights at Freddy's Again! - 12th Jan 25
Squid Game Stock Market 2025 - 5th Jan 25

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Breakdown and Slide in Crude Oil Price

Commodities / Crude Oil Nov 30, 2016 - 12:17 PM GMT

By: Nadia_Simmons

Commodities

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
Crude oil gained 2.21% yesterday and came back above $47, but taking a dive today, confirming that closing the long positions yesterday and taking profits off the table was a good idea. Now, the question is how much does today’s decline actually change.
Let’s take a look at the charts to find out (charts courtesy of http://stockcharts.com).


Looking at the daily chart, we see that crude oil bounced off the mid-Now lows and climbed above $47, reaching the previously-broken 50-day moving average. We saw similar situation at the beginning of Jul and at the turn of Oct and Nov. In both previous cases, verification of breakdowns preceded further declines, which increases the probability of the realization of our yesterday's outlook:

(…) With Friday’s decline, the commodity also slipped below the 50-day moving average and Fibonacci levels, which doesn’t bode well for light crude – especially when we factor in a sell signal generated by the Stochastic Oscillator. Taking all the above-mentioned negative factors into account, it seems that crude oil could extend losses and even a test the previously-broken 200-day moving average in the coming days.

With the outlook being rather bearish despite yesterday’s upswing, it is quite natural to view today’s decline as a confirmation. Besides, the bearish scenario is also supported by the current situation in the oil-to-gold ratio.

From this perspective, we see that the ratio reached the key red resistance zone, which stopped increases in Oct. This area triggered also a pullback on Friday, which in combination with sell signals generated by the CCI and Stochastic Oscillator suggests that lower values of the ratio (and crude oil as strong positive correlation remains in play) are just around the corner.

Summing up, although crude oil rebounded yesterday, the 50-day moving average stopped further improvement, which in combination with a sell signal generated by the Stochastic Oscillator and the current situation in the oil-to-gold ratio suggests that we’ll see another attempt to move lower and even a test the 200-day moving average in the coming days. For now, it seems that keeping the profits from the previous trades intact and waiting for another trading opportunity is justified from the risk to reward point of view.

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

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

Thank you.

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