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 Carves Inverse Head-and-Shoulders Despite Venezuela Sanction

Oil Carves Inverse Head-and-Shoulders Despite Venezuela Sanction

2019-01-29 20:08:00
David Song, Currency Strategist
Share:

Oil Talking Points

Oil prices trade near the monthly-high ($54.24) as the U.S. imposes sanctions against Petróleos de Venezuela, S.A. (PDV S.A.), and the recent developments keep the topside targets on the radar for crude as an inverse head-and-shoulders formation takes shape.

Image of Daily change for major financial markets

Oil Carves Inverse Head-and-Shoulders Despite Venezuela Sanction

Image of daily change for oil prices

The weakening outlook for supply is likely to spur a larger recovery in crude especially as Saudi Arabia Energy Minister Khalid Al-Falih pledges to reduce output ‘well below the voluntary cap’ during the proposed six-month period, and the ramped up efforts to stabilize the energy market is likely to keep crude prices afloat as ‘demand will start picking up at the end of the first quarter and into the second quarter.’

It seems as though the Organization of the Petroleum Exporting Countries (OPEC) and its allies will continue to take extraordinary measures to defend crude as Russia Minister of Energy, Alexander Novak¸ endorses a price range of $55-65bbl, and the current environment raises the risk for a larger recovery as the advance from the 2018-low ($42.36) appears to be fueling the near-term shift in retail interest.

Image of IG Client Sentiment for crude oil

The IG Client Sentiment Report shows 59.5% of traders are now net-long crude compared to 67.7% on January 10, with the ratio of traders long to short at 1.47 to 1.Keep in mind, traders have been net-long since October 11 when oil traded near the $71.00 mark even though price remains 26.1% lower since then.The number of traders net-long is 15.3% lower than yesterday and 15.8% lower from last week, while the number of traders net-short is 37.9% higher than yesterday and 30.9% higher from last week.

Profit-taking behavior may account for the decline in net-long position, but the ongoing accumulation in net-short interest warns of a broader shift in market behavior even though oil breaks out of the downward trend from late-2018. In turn, a larger recovery may materialize as an inverse head-and-shoulders takes shape, with the Relative Strength Index (RSI) also providing a constructive outlook for crude as the oscillator extends the bullish formation from November. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Oil Daily Chart

Image of oil daily chart
  • Crude appears to be stuck in a narrow range following the failed attempt to test the December-high ($54.55), but the inverse head-and-shoulders formation raises the risk for a larger correction, with a break/close above the $55.10 (61.8% expansion) to $55.60 (61.8% retracement) region opening up the $57.40 (61.8% retracement) area.
  • Next region of interest comes in around $59.00 (61.8% retracement) to $59.70 (50% retracement) followed by the Fibonacci overlap around $62.70 (61.8% retracement) to $63.70 (38.2% retracement).

For more in-depth analysis, check out the 1Q 2019 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 markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- 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.