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Technical Weekly: Timing the Crude Oil Low

Technical Weekly: Timing the Crude Oil Low

Jamie Saettele, CMT, Sr. Technical Strategist
  • EUR/USD – watch the 55 week average…again!
  • Pay attention to .7380 for AUD/USD
  • Timing the crude oil low

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--For more analysis and trade setups (including current positions and the ‘watchlist’), visit SB Trade Desk

--Free trading tips

EUR/USD

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

High Frequency Trading Tools

-Long term EUR/USD comments are unchanged. “EUR/USD has been trading sideways since March 2015. This is one of the longest sideways periods in history (as defined by the length of time between 52 week closing price extremes) and the eventual break will trigger a significant directional move. My contention has been that the move will be higher given the presence of the 31 year trendline as a floor.” The bullish outside week (week that ended 7/29) offers ‘something to work with’ on the bull side. Price is back above the 55 week average as well, which proved important as resistance and support at several junctures over the last year. SSI has flipped to negative, which is viewed as a positive for price. An inverse head and shoulders pattern is possible from the May 2015 high and could launch a major advance (strength through 1.1450 would confirm). As always, define your risk points (read more about traits of successful traders here).

-For forecasts and 2016 opportunities, check out the DailyFX Trading Guides.

GBP/USD

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-GBP/USD continues to act well above long term support. Remember, “the July low is just pips below the 78.6% retracement of the 1985-2007 range. A long term trendline (1993-2001 line) is also under price and the July candle sports a long lower wick, which can indicate demand. In other words, it’s possible that GBP/USD trades sideways or higher from here with 1.3500-1.3600 as a barrier to gains. If the July low gives, then there may be no support until early 2017 based on the 96 month (8 year) cycle low count.” Near term, the rate is testing the 13 week average, which has historically been a decent trend filter.

AUD/USD

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-Comments for the last few months have noted that “AUD/USD is approaching an important juncture defined by slope considerations and the pre-May rate cut high at .7719. This level may be resistance but a break above would leave Aussie in full blown bull camp with focus on the May 2015 high at .8163 and eventually .8600+.” The ‘important juncture’ continues to hold so risk is for additional range trade (below .7400 then think about support) before the next leg up.

NZD/USD

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-Kiwi continues to turn back from the 1985-1993 trendline. The line is acting as a serious energy point so the move that materializes from this point should be sharp. I’ve been thinking that the move will be lower for a test of .6900 (October and December 2015 highs) but weakness under .7160 is needed to act on that opinion. The next area of upside in the event of additional strength is probably .7460 (2005 high and 2012 low).

USD/JPY

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-USD/JPY is acting well at long term support. Continue to monitor 105.40 as a near term pivot. “I’m inclined to look higher but would be aware of 105.40 (January 2014 high, October 2014 low and May 2016 low) as resistance.” Even longer term, I’ll point out that USD/JPY is testing its 60 month average. 60 months is 5 years. If the rally from 2011 is from a ‘macro’ double bottom then a turn higher here isn’t inconceivable. For example, the downtrend into the 1995 low was interrupted by a correction into the 1990 high that ended near the 60 month (5 year) average. Divergence with RSI on the weekly is present now too.”

USD/CAD

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-As noted previously, “the dynamic with the 55 average is interesting. This average was resistance in May and July. The average was support for the last 3 years so the fact that the average has been acting as resistance warns that a bearish cycle may be underway. Price action since the May low could also end up as a wedge.” If price action since the May low was a bearish wedge, then this week’s high (1.3147), which tested former wedge support, probably needs to hold. Again, the target on a break under the May low would be the May 2015 low at 1.1919. Meanwhile, strength through 1.3300 could carry to 1.38. I’m ‘double-minded’ when it comes to CAD at the moment-a sentiment that is shared regarding crude oil too.

USD/CHF

Weekly

Technical Weekly: Timing the Crude Oil Low

Chart Prepared by Jamie Saettele, CMT

See REAL TIME trader positioning

-The 2011-2014 trendline is quite the barrier. This line held yet again on this latest drop. As noted for most of 2016, “failed breakout attempts late in 2015 and early in 2016 warn of an eventual downside break.” I thought we may have been on our way with USD/CHF testing the line so soon after the May touch. I wrote last week to “pay attention to the slope lines just above price (up to about .9900 next week). Strength through there could set off a major rally. Bottom line, Swissie is coiled to the extreme (as are a number of currencies). Long consolidations lead to strong trending moves. Direction is unclear however.” The ‘slope line above price’ was resistance this week (high was .9884). It’s a waiting game for the break.

BONUS Chart

Crude Oil Weekly

Technical Weekly: Timing the Crude Oil Low

Down big, sideways to up, and down big again. This is the general path that crude oil took from July 2008 to February 2016. It’s also the general path that crude took from September 1990 to November 1998. Both are 8 year cycles and both are relatively the same shape so crude could already be on the path to much higher prices from the February low. Keep an open mind though. The comparison between the 2 cycles have exhibited varying degrees of similarity with the closest matches being the very beginning (9/90-2/91 matches 7/08-11/08), middle (12/93-7/95 matches 9/11-4/13) and end (12/96-11/98 matches 9/14 to ??/16). In fact, a number of turns within the 2 sequences match perfectly (see close-up chart below). If this ends with a perfect match then the final crude oil low (does NOT have to be below the February low) will be next week or in mid-November. The November date matches well with seasonal tendencies.

-JS

Technical Weekly: Timing the Crude Oil Low

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