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
Mixed
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
GBP/USD
Bullish
USD/JPY
Bearish
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
Bearish
Oil - US Crude
Bearish
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
Bitcoin
Mixed
More View more
Real Time News
  • Commentary from #Davos suggests many think a low-yield slog is ahead. As a result, "cash is trash", to quote @RayDalio. Given the broad range of risks however (geopolitical, etc), falling yields make owning liquidity both attractive & relatively cheap... #USD
  • Heads Up:🇯🇵 JPY All Industry Activity Index (MoM) (NOV) due at 04:30 GMT (15min), Actual: N/A Expected: 0.4% Previous: -4.3% https://www.dailyfx.com/economic-calendar#2020-01-23
  • My trading video for today: 'S&P 500 and VIX May Be As Exposed to #ECB as the $EURUSD' https://www.dailyfx.com/forex/video/daily_news_report/2020/01/23/SP-500-and-VIX-May-Be-As-Exposed-to-ECB-as-the-Euro.html?ref-author=Kicklighter?CHID=9&QPID=917719
  • The $USD may fall against the Swedish Krona and Norwegian Krone if commentary from officials at the Davos forum uplift market mood and pressure haven-linked currencies. Get your market update from @ZabelinDimitri here:https://t.co/SZAG0yMu3d https://t.co/JVwCtDFWH4
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Gold: -0.08% Silver: -0.30% Oil - US Crude: -1.59% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/d3BzFYEB3V
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.44% 🇯🇵JPY: 0.17% 🇳🇿NZD: 0.03% 🇬🇧GBP: -0.01% 🇪🇺EUR: -0.04% 🇨🇦CAD: -0.19% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/zJQtZoZo1l
  • #GBP, #NOK and #NZD are expected to be the most-active #G10 currencies against the #USD with one-week implied volatility at 8.70, 7.10 and 6.65 respectively -BBG [delayed]
  • A recession is typically accompanied by falling stock prices, but equities are not the be-all and end-all for recession investment strategies. Get your market update from @PeterHanksFX here: https://t.co/H0Rf3AkECs https://t.co/SoBkKHhAOA
  • Anti-risk #JPY cautiously outperforming against its major peers during Thursday Asia trade with local benchmark stock indexes aiming lower: #Nikkei225 (-0.60%), Shanghai Composite (-0.67%), #ASX 200 (-0.61%), #KOSPI (-0.50%) [delayed]
  • Philippine fourth-quarter GDP at 6.4% y/y as expected and up from 6.0% prior. While the outcome was as anticipated, that was the fastest pace of growth since Q1 2018 $USDPHP #PHP #Philippines
Crude Oil Forecast: Sharp Rebound Meets Inflection Point

Crude Oil Forecast: Sharp Rebound Meets Inflection Point

2019-02-02 08:00:00
Tyler Yell, CMT, Currency Strategist
Share:

Crude Oil Price Forecast Talking Points:

  • The ONE Thing: Crude oil has rocketed higher against the prior downtrend to the 38.2% retracement on a dual effort of a weaker USD, and supply constraints centered on Saudi cuts and Venezuelan sanctions. Now, the real positing test begins.
  • Crude oil jumped by 18% in January toward $55/bbl. The sustaining backdrop of further gains will look to an increasingly weak US Dollar, and progress over the US-China trade war for support.
  • ICE Brent net-long positioning reached a 10-week high last week and could continue as US Dollar weakness continues after an overly patient Powell on Wednesday took Fed Hikes off the horizon.

You are in luck, DailyFX’s Q1 2019 Crude Oil Forecast was just released

Technical Forecast for US OIL: Neutral

Oil

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

The price of crude oil, and it’s near 20% advance to start the hear after a horrid Q4 is about to meet a critical test. That test is composed of the Ichimoku cloud with the lagging line (listen to a podcast on the value of this indicator) and the 38.2% Fibonacci retracement of the Q4 decline.

From a positioning standpoint, the bull’s have had the run of the show since the last week of 2018, and the price action has proven that true. Now, with a move higher in price on falling supply and a weaker USD, and a doubtful backdrop of aggressive growth due to Chinese PMI and recessions showing up in Europe bears may see an opportunity.

However, if bears remain silent, and fail to challenge the rise in crude, we could be seeing the start of an aggressive rally in a majority of risk assets in 2019. Crude has shown a strong correlation to high yield credit and emerging markets, typically the riskiest ways to trade credit, and equities respectively and all of which find support when the US Dollar weakens.

Looking for a fundamental perspective on crude oil? Check out the Weekly Crude Oil Fundamental Forecast.

Backwardation Beckons Bulls

Crude Oil Forecast: Sharp Rebound Meets Inflection Point

Data source: Bloomberg

The change in crude futures beyond the front-month is showing that fading the current move could be costly. The December 2019 crude oil future contract has traded at the largest premium to the December 2020 contract since early November.

A premium on a front-month contract in the future’s market of a homogenous product like oil shows stronger demand or a supply shortage such that the benefits of holding outweigh the costs storage, insurance, etc.

Looking to the chart, crude oil may well continue higher as it recovers from the 44% drop from October to late December. The current corrective or trend-consolidating move may well lead into another advance as the supply disruptions persist thanks to the upheaval of Venezuelan leadership.

Fly in the Bull’s Ointment?

Fed

Data source: Bloomberg, NY Fed Reserve

The technical picture is hitting resistance as alluded to above while the futures market continues to show signs of imminent buying pressure. However, there remains a fly in the ointment for crude’s future, and its head is poking up in Europe & Asia. A potential US Recession.

The chart above shows the yield curve spread of the 3-month Treasury Yield and the 10-Year or cash returns minus inflation and growth premiums in orange, which has narrowed sharply in recent years. The blue line is the New York Federal Reserve’s Probability of a Recession Index that is set to inch closer to alarm levels. Per Bloomberg’s Mark Cudmore, the indicator that currently sits near 21.4% chance of a recession has not surpassed 28% probability without a US recession ensuing.

Is a recession on the horizon? If so, crude demand and the crude price could find the Fibonacci resistance zone of $55-$64, which is the 38.2%-61.8% retracement level zone too much to handle.

We’ll see.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Checkout DailyFX’s New Podcast: Trading Global Market’s Decoded on iTunes

Talk markets on twitter @ForexYell

Other Weekly Technical Forecast:

AUD Forecast – AUD/USD and AUD/JPY May Extend Climbs as AUD/CAD Holds its Ground

NZD Forecast – NZDUSD Rally May Stall at Resistance, NZDCAD to Test Support

US Dollar Forecast – Dollar Avoids Critical Breakdown, But for How Long?

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

DISCLOSURES

News & Analysis at your fingertips.