News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/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
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
Wall Street
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
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Gold and silver prices may continue to rise in the coming months on the back of falling real rates of return and the prospect of additional fiscal support under a Biden administration. Get your market update from @DanielGMoss here:https://t.co/OMNoNHn2vZ https://t.co/155l4SQU6P
  • Will the Swiss Franc find reprieve after recent losses against the Canadian and New Zealand Dollars as NZD/CHF and CAD/CHF uptrends face key chart barriers? Find out from @FxWestwater here:https://t.co/c89gcaNhTt https://t.co/vkLRsG8KEn
  • The Australian Dollar may be at risk of losses against the New Zealand Dollar after an unexpectedly high NZ inflation reading sent AUD/NZD towards challenging short-term rising trend support. Get your $AUD market update from @ddubrovskyFX here:https://t.co/JoaUMTv80S https://t.co/Hl4I8Gl7Ez
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/6lPNDoWZAw
  • The gold price rebound keeps XAU/USD within the confines of the August downtrend. From a trading standpoint. Get your $XAUUSD market update from @MBForex here:https://t.co/B3Jct6mIBD https://t.co/gHAtO2jcrp
  • Gold recovered from a steep sell-off this morning to finish the day just lightly lower $XAU $USD https://t.co/lkcyL8gts9
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.05% 🇨🇭CHF: 0.01% 🇯🇵JPY: -0.25% 🇳🇿NZD: -0.55% 🇦🇺AUD: -0.64% 🇨🇦CAD: -0.75% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/UVTYrLMwRS
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.54% Gold: -0.87% Silver: -1.82% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/3BoduI6beG
  • Earnings season is underway and key tech leaders are set to report next week. Get your #Dowjones market update from @PeterHanksFX here:https://t.co/vAesS48lgG https://t.co/es8tChHx3y
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in Wall Street are at opposite extremes with 66.20%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/cFre7YkQsc
WTI Crude Oil Price Forecast: Brexit ‘Risk-Off’ Knocks Oil Off Its Pedestal

WTI Crude Oil Price Forecast: Brexit ‘Risk-Off’ Knocks Oil Off Its Pedestal

Tyler Yell, CMT, Currency Strategist

To receive Tyler’s analysis directly via email, please SIGN UP HERE

Talking Points:

An uncomfortable technical picture is aligning with the uncertainty of a post-Brexit world. This uncertainty is becoming obvious, as we’ve seen equity market selloff, the Chinese Yuan be devalued the most since August to the US dollar, and subsequent aggressive US dollar strength.

At a time when confidence was reemerging in the oil market as demand was picking up and a potential balance from oversupply in the first half of 2016, the Brexit vote likely came at the worst possible time. While desiring to avoid a melodramatic statement, producers began accelerating production with the assumption demand was picking back up aggressively and that the dollar was under control. However, with the recent break above 12,000 in the US dollar index and the breakdown in equities like the SPX 500 we could see a drop in risk sentiment that brings WTI Crude Oil (CFD: US Oil) lower as well.

The natural question is how much optimization was priced in oil around $50? If the answer is ‘a lot’, what will the deflating optimism look like as we get a better understanding of how strong the dollar could become and if oversupply will become a problem again.

1-Yr Chart of Oil Shows Key Resistance at $51/bbl & $60/bbl

WTI Crude Oil Price Forecast: Brexit ‘Risk-Off’ Knocks Oil Off Its Pedestal

The chart above shows the strong rebound in the price of oil off the February low of $26.03 per barrel. When looking at trend continuation, naturally you want to see support continue to hold.

There are three things that stand out on the Daily US Oil chart. First, the resistance around $50 from the October high. Second, the lower high into the Brexit vote that was met with a much stronger US dollar. Lastly, the pressure now being put on the 55-day moving average that has been a clear directional bias indicator for crude.

At the risk of oversimplification, if the US dollar begins to strengthen further, and WTI Crude Oil (CFD: US Oil) falls back below the 55-Day Moving Average (currently at $46.59 per barrel), we could likely see a retest of the March corrective zone. This zone occurred when US Dollar showed strength again that eventually faded. This zone sits at $41.85/$35.81 per barrel. A break below this zone would favor retest below $30 a barrel.

Put another way; the recovery was fragile, and we knew it was such, but an unwinding of the risk-on environment and such an aggressive fashion could see a rather quick drop for which we should be prepared.

Key Support & Resistance Levels from Here (Visual Map Below)

Given the strong pushes off resistance in the $50 area, most attention should be directed at support and whether or not those levels hold. If the support levels mentioned above do not hold, it will favor a further breakdown toward the Fibonacci zone mentioned earlier at $41.85/$35.81 per barrel.

The first low to focus on is $45.81, which is the June low. The second support level to keep an eye on is the Weekly S2 pivot at $44.44 per barrel. A break below the weekly S2 pivot often indicates an outsized move or a shock in the direction of a new trend. The third support level is $43 per barrel level that was the May low.

If these levels of support are broken, it likely indicates a larger risk-off picture is taking hold. In this event, we should look for higher US dollar and possibly higher XAU/USD or Japanese Yen.

Given sentiment post-Brexit, the resistance does not require as much attention. However, if we break above $50.51 per barrel that would likely be an indication that the bull market was shot at, and the bullet missed, and we could be on our way to seen a resumption of the risk on trade. While this is not the probable event, it should at least sit on the shelf until we get a clear understanding what a post-Brexit world looks like in markets.

Contrarian System Warns of Further Upside As of 6/27/16

WTI Crude Oil Price Forecast: Brexit ‘Risk-Off’ Knocks Oil Off Its Pedestal

In addition to the technical focus around multiple support-zones, we should keep an eye on retail sentiment, which favors more upside price action. Further upside is currently aligned with our Speculative Sentiment Index or SSI for now.

The ratio of long to short positions in the USOil stands at -1.25, as 44% of traders are long. Yesterday the ratio was -1.63; 38% of open positions were long. Long positions are 38.1% higher than yesterday and 19.6% below levels seen last week. Short positions are 6.3% higher than yesterday and 29.0% below levels seen last week. Open interest is 18.4% higher than yesterday and 36.4% below its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the USOil may continue higher. The trading crowd has grown less net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further mixed trading bias.

A break below the support levels mentioned above as well as a flip to Bullish Retail Sentiment could be the first credible signs from the combination of sentiment and technical analysis that downside bias is preferred.

Key Levels Over the Next 48-hrs As of Monday, June 27, 2016

WTI Crude Oil Price Forecast: Brexit ‘Risk-Off’ Knocks Oil Off Its Pedestal

T.Y.

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

DISCLOSURES