We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bullish
More View more
Real Time News
  • Crude oil prices may encounter significant selling pressure if China retaliates against the US and pushes back trade war talks. Get your crude #oil market update from @ZabelinDimitri here: https://t.co/vMwa6rmFpH #OOTT https://t.co/vPkJ3oQgwV
  • The Singapore Dollar is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the $SGD and how to trade it. Get your update from @ddubrovskyFX here: https://t.co/eWLM9XZs5Y https://t.co/OWuwGML4Ch
  • RT @FT: Huawei admits that US sanctions are hurting https://t.co/GIT4XSfszx
  • RT @WSJecon: Mexico’s inflation eased in September, coming in line with the Bank of Mexico’s 3% target for the first time in three years ht…
  • My phone's decided to give up the ghost and I've been phoneless for 24 hours. Not coincidentally, I've been a machine tackling errands around the house. What a time to be alive.
  • #Gold remains stuck in a range as a range of conflicting forces battle and fail to take control of price action. Get your $gld market update from @nickcawley1 here: https://t.co/pw7UjkUyqH $XAUUSD https://t.co/YD8L6knjhe
  • Geopolitical developments send oil prices soaring or falling. Get your market update here: https://t.co/0znHZPvPON https://t.co/s358dvMBeR
  • Currency markets may be battered by breakneck volatility if a slowdown in global economic growth triggers a collapse in the fragile market for collateralized loan obligations (CLOs). Get your market update from @ZabelinDimitri here:https://t.co/KfjjtaXs7b https://t.co/sWeSlv33pb
  • The #Dow Jones and #Nasdaq 100 will await key earnings from some of the world’s largest manufacturers and tech companies while the #DAX grapples with freshly-imposed tariffs. Get your equities market update from @PeterHanksFX Here: https://t.co/u2lG19JFt3 https://t.co/OHs4rQEH7T
  • Crude #oil prices are consolidating above a key support zone we’ve been tracking for more-than three months now. Get your market update from @MBForex here: https://t.co/XaACvEpLG4 #OOTT https://t.co/XjmjUt4Par
Oil Prices Risk Larger Rebound Ahead of OPEC Meeting Amid RSI Signal

Oil Prices Risk Larger Rebound Ahead of OPEC Meeting Amid RSI Signal

2018-12-04 18:00:00
David Song, Currency Strategist
Share:

Oil Talking Points

Crude looks poised for a larger recover ahead of the Organization of the Petroleum Exporting Countries (OPEC) 175th meeting on December 6 as oil prices break out of a narrow range, and recent developments bring the topside targets back on the radar as the Relative Strength Index (RSI) finally bounces back from oversold territory and flashes a textbook buy-signal.

Image of daily change for major financial markets

Oil Prices Risk Larger Rebound Ahead of OPEC Meeting Amid RSI Signal

Image of daily change for oil prices

Fresh comments from Saudi Energy Minister Khalid Al-Falih appear to be rattling the recent rebound in crude as the official warns that it’s ‘premature’ to adjust production, and it remains to be seen if OPEC and its allies will deliver a major announcement ahead of 2019 as producers ‘figure out what needs to be done and by how

much.’

The comments suggest there’s a growing rift within the alliance especially as Qatar plans to leave the group to focus on liquified natural gas (LNG), and a lack of consensus to respond to falling oil prices may foster a more bearish outlook for crude amid the weakening outlook for global demand.

With that said, OPEC and its allies may attempt to buy time and avoid overemphasizing the recent volatility in oil prices, but sentiment surrounding crude remains skewed as the retail crowd continues to bet on higher oil prices.

Image of IG client sentiment for crude oil

The IG Client Sentiment Report shows 81.8% of traders are still net-long crude compared to 81.9% last week, with the ratio of traders long to short at 4.5 to 1.In fact, traders have been net-long since October 11 when oil traded near the $71.00 mark even though price has moved30.1% lower since then. The number of traders net-long is 4.6% higher than yesterday and 3.4% lower from last week, while the number of traders net-short is 5.7% higher than yesterday and 16.2% higher from last week.

Despite the uptick in net-shorts, the ongoing tilt in retail position provides a contrarian view to crowd sentiment as traders continue to bet on a near-term recovery. As a result, the broader outlook for crude oil remains tilted to the downside as it snaps the upward trend from earlier this year, but recent developments in the Relative Strength Index (RSI) warns of a larger rebound as the oscillator bounces back from overbought territory and climbs above 30. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Image of oil daily chart
  • Broader outlook for crude remains bearish as it snaps the upward trend from earlier this year, but the string of failed attempts to break/close below the $49.00 (38.2% expansion) to $49.50 (78.6% retracement) region raises the risk for a larger rebound.
  • In turn, the $55.00 (61.8% expansion) to $55.40 (61.8% retracement) region sits on the radar, with the next area of interest coming in around $59.00 (61.8% retracement) to $59.50 (50% retracement) followed by the former-support zone around $62.40 (23.6% expansion) to $63.60 (38.2% retracement).

For more in-depth analysis, check out the Q4 Forecast for Oil

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.