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
Oil - US Crude
Mixed
Wall Street
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
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
GBP/USD
Mixed
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
More View more
Real Time News
  • The ongoing contraction in US production may keep #oilprices afloat in June as crude output falls to its lowest level since October 2018. Get your crude #oil market update from @DavidJSong https://t.co/jj1bMLX0DF https://t.co/O9NOqbfHkb
  • watching the #SpaceX launch🍿
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/d00z4019XE
  • The medium-term #gold outlook still seems favorable as the #Fed, #ECB and more keep rates around 0. Immediate event risk ahead includes the #RBA and #BoC interest rate decisions, US jobs data and Brexit. Get your gold market update from @ddubrovskyFX here: https://t.co/ABXy78LmUn https://t.co/rCALcGaKOL
  • The trio of central banks overseeing the commodity currencies have already cut their main rates to all-time lows. Get your market update from @CVecchioFX here: https://t.co/OSUXrN5P3j https://t.co/Cxt86jl28N
  • The Japanese Yen fell for a third consecutive week with price testing resistance into June open. Here are the levels that matter on the $USDJPY weekly technical chart. Get your #currencies market update from @MBForex here: https://t.co/1QPXP0g7Ew https://t.co/WUtXHoRoQX
  • $USDZAR: A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. Get your $USDZAR technical analysis from @PaulRobinsonFX here:https://t.co/TNsQ4JJu6E https://t.co/I4yCjs2ja0
  • The US dollar continued to sell-off this week and the greenback’s future will be decided by commentary from the White House and not the Federal Reserve over the coming days and weeks. Get your #currencies market update from @nickcawley1 here: https://t.co/lpHneO3s2h https://t.co/bZ5klohLNd
  • #Gold prices have continued to push higher as expectations have built for global Central Banks to remain very loose and passive with monetary policy for the foreseeable future. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/h5tF3kAZfd https://t.co/VAYy9FGHcQ
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/YvoHlUsdVr
Crude Oil Price Forecast: Early 2017 Volatility Pattern Arises

Crude Oil Price Forecast: Early 2017 Volatility Pattern Arises

2016-12-29 20:15:00
Tyler Yell, CMT, Currency Strategist
Share:

Access Free Oil Trading Guide from DailyFX Analysts HERE!

Talking Points:

  • Crude Oil Technical Strategy: rising wedge should alert bulls
  • Watch for move to and possibly through key support on early-2017 pull backs
  • Crude inventory gains on DoE data opens up focus on delivered OPEC cuts

A core observation of the current state of the Oil market is that short sellers have been nearly wiped out as we trade near 17-months highs and aggressively bullish options have risen. Naturally, the development of the OPEC and non-OPEC production cut accord in late November through mid-December was critical through this. However, we’re now a week away when the production cuts are going to be verified as they are set to go into effect in the New Year. We recently argued that Saudi’s hand may have been forced to cut due to capacity issues that were made aware in a Reuters report.

We are now trading at the top of a channel drawn with the same slope as the support that we had been focusing on throughout the 2016 rebound and into 2017 (rising trendline in black on the chart above) drawn from the first higher low off the rebound from the February low. While we remain Bullish due to fundamental and technical factors, there is a rising wedge pattern developing that should warrant attention.

The rising wedge pattern has developed on the recent break into 17-month highs. Per the Daily Sentiment Index as of Wednesday’s close, the Crude market is composed of 75% Bulls, which remains well short of the 85% extreme Bullish sentiment reading that could mean there is a good deal more room to run in the market as 2017 gets underway. However, if the production cuts do not come to pass, it’s possible that the rising wedge could bring about a sharpsell-off that retraces (likely not all) of the recent 28% rally from the mid-November low.

The wedge pattern is also developing on the RSI(5) below the price on the chart below. A breakdown in RSI(5) over five periods would be indicative of average losses outpacing average gains over the past 5-periods that would likely make way for a sharp retracement that aligns with the price pattern on the chart.

Join Tyler Monday’s at 3 pm EST to discuss key global macro trends like Oil (Free Registration)

A worthwhile lesson to be shared is that there are two types of rising diagonals. Reversal often come after ending diagonals whereas sharp trend advancements develop after leading diagonals. Naturally, it’s difficult to tell which is which beforehand and misinterpreting a leading diagonal as an ending diagonal has been a costly mistake and one that changed how I manage risk when trading.

If we are seeing an ending diagonal, a reversal should develop in the price of Crude Oil, and we’d be on the watch for the price to test the prior resistance pivot range (50/51 per barrel). A break down through the pivot zone would open up focus on the rising support that lies between $47/45. Only a break below this zone would take us from Bullish to Neutral. Until then, we’ll favor eventual upside heading into 2017.

Conversely, a leading diagonal would open up the 2015 high of $62.56. Should price fail to break the $50/51 support zone (highlighted yellow rectangle), we’ll expect an eventual move to the 2015 high in early 2017. Ichimoku also favors a Bullish continuation move.

D1Crude Oil Price Chart: USOIL Sticks Near $51/Bbl. After Extending Further From Prior Channel

Crude Oil Price Forecast: Early 2017 Volatility Pattern Arises

Chart Created by Tyler Yell, CMT Courtesy of TradingView

Key Levels Over the Next 48-hrs of Trading as of Wednesday, December 29, 2016

Crude Oil Price Forecast: Early 2017 Volatility Pattern Arises

T.Y.

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

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

DISCLOSURES

News & Analysis at your fingertips.