Analysis: Looking for Some Sort of Reversal in Crude Next Week
- Key cyclical turning point next week
- Waiting for sentiment to turn more lopsided
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
The first half of next week looks potentially important for Crude from a time cycle perspective. Several short and longer-term cyclical methods converge around this time which suggests to us that the commodity is vulnerable to a reversal. Given the rather persistent grind higher over the past few weeks we favor some kind of top. A key variable we look for around these windows is an extreme in sentiment. One of our favorite metrics for gauging this is the Daily Sentiment Index or DSI which is a daily survey of short-term futures traders. As of Wednesday’s close, DSI was only around 77% bulls. Before trying to fade such a strong trend we will look for DSI to get closer to 85% bulls and price to at least test resistance near $105.00.
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Crude Chart: May 22, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk Next Week:
LEVELS TO WATCH
Resistance: 104.20 (Fibonacci), 104.90 (Gann)
Support: 102.85 (Gann), 102.05 (Fibonacci
Strategy: Sell (FXCM) USOil early next week.
Entry:Sell USOil on the first daily down close next week
Stop: No more than 1% above entry.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.