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
Bullish
Oil - US Crude
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
Bitcoin
Bearish
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.48%, while traders in USD/CAD are at opposite extremes with 83.81%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/M2mRQ3aQtT
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Silver: 0.33% Oil - US Crude: -0.01% Gold: -0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/gPYjSE9yTT
  • RT @johnauthers: Yikes. Exclude the big 5 (Microsoft, Apple, Alphabet, Amazon and Google) and U.S. earnings were down 7.5% in the 4th quart…
  • RT @economics: China is considering making some purchases of U.S. agricultural goods by early March as a way to show it’s still committed t…
  • RT @YuanTalks: #China's passenger trips fell to 12.37 million on Feb. 16, 80.6% down from a year earlier, said the Ministry of Transport.…
  • RT @LiveSquawk: Coronavirus: China Urged To Delay Purchase Elements Of US Trade Deal As Outbreak Rocks Economy https://t.co/mDnhI2kKC0
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: 0.20% Germany 30: 0.18% Wall Street: 0.17% France 40: 0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/N3N6LrdxPi
  • RT @ftchina: China limits uncensored internet to control coronavirus coverage https://t.co/EI0UDAnfpj
  • RT @CNBC: Coronavirus could impact 5 million companies worldwide, new research shows https://t.co/dG5l0i8KsN
  • Contrary to standard belief, greed and profits are often inversely correlated in trading. Remaining disciplined is key to a successful trading strategy. Learn how to control greed when trading here: https://t.co/5GXReUsKRj https://t.co/nNzoU8S8jF
Crude Oil Forecast: Multi-Month Triangle Eyes Bullish Breakout

Crude Oil Forecast: Multi-Month Triangle Eyes Bullish Breakout

2019-12-16 15:30:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Crude Oil Price Forecast Overview:

  • As macro headwinds dissipate – the US-China trade war, Brexit – global growth concerns have faded in tandem, helping lift energy prices.
  • Crude oil prices have been consolidating in a triangle since October 2018 – a topside breakout may be gathering pace.
  • Recent changes in retail trader positioninggives us a stronger crude oil price-bullish contrarian trading bias.
Oil Forecast
Oil Forecast
Recommended by Christopher Vecchio, CFA
Get Your Free Oil Forecast
Get My Guide

Crude Oil Prices’ Strong December

Energy markets have had a December to remember. As macro headwinds dissipate – the US-China trade war, Brexit – global growth concerns have faded in tandem, helping lift energy prices. Crude oil prices are pacing for their third-best month of the year so far (8.95% month-to-date), trailing behind June (9.01%) and January (18.9%).

Balancing Supply and Demand Against Macro Concerns

For many weeks now, crude oil prices have been walking a fine line supply and demand concerns. On the demand side, agreement to a Phase 1 deal in the US-China trade war, coupled with a rebound in US growth expectations, has alleviated fears that a global recession is imminent. On the supply side, even as US energy inventories continue to build, news that OPEC+ would be reducing production through March 2020 has helped support energy markets.

Economic Calendar Week Ahead Impact on Crude Oil Prices

Outside of the US, the forex economic calendar is saturated in the coming days: the December Bank of Japan rate decision; the Q3’19 New Zealand GDP report; the November Australia jobs report; and the November inflation reports from Canada and the UK.

Yet none will matter as much as the inventory data due out mid-week. Wednesday’s US EIA inventories report has proven to be a veritable source of volatility in energy markets in recent weeks given the surprising amount of excess supply that has been placed in storage. Environments defined by rising inventories are typically bearish for crude oil prices, and yet, crude oil prices are at their highest level since mid-September.

Resiliency by crude oil prices in an environment marked by rising supply in the short-term bodes well for longer-term bullish prospects.

Crude Oil Price Technical Analysis: Daily Chart (October 2018 to December 2019) (Chart 1)

Crude Oil Forecast: Multi-Month Triangle Eyes Bullish Breakout

For most of the second half of 2019, crude oil prices have been pinned within a tight trading range, moving between the 23.6% and 50% retracements of the 2018 high/low range, from 50.49 to 59.61. Yet at the end of last week, and with follow-through today, crude oil prices have eclipsed 59.61, and are now making their wave above the descending trendline from the October 2018 and September 2019 highs – resistance in the 14-month long triangle.

Crude oil prices are above their daily 5-, 8-, 13-, and 21-EMA envelope signaling firm bullish momentum. Daily MACD continues to rise in bullish territory, while Slow Stochastics are holding in overbought territory. The momentum profile is clearly bullish, and the path of least resistance is higher for crude oil prices.

Crude Oil Price Technical Analysis: Weekly Chart (December 2015 to December 2019) (Chart 2)

Crude Oil Forecast: Multi-Month Triangle Eyes Bullish Breakout

The longer-term crude oil price forecast has not changed – but it’s about to. Crude oil prices are now trading above the rising trendline from the October 2018 and September 2019 highs, signaling a break above symmetrical triangle resistance. On the weekly timeframe, crude oil price momentum is turning higher in a meaningful way. Crude oil prices are extending further above their weekly 4-, 13-, and 26-EMA envelope. Weekly MACD continues to edge higher in bullish territory, and Slow Stochastics are moving towards overbought territory. The multi-month triangle may be on the verge of a topside breakout.

IG Client Sentiment Index: Crude Oil Price Forecast (December 16, 2019) (Chart 3)

Crude Oil Forecast: Multi-Month Triangle Eyes Bullish Breakout

Crude oil: Retail trader data shows 35.32% of traders are net-long with the ratio of traders short to long at 1.83 to 1. The number of traders net-long is 12.03% lower than yesterday and 11.53% lower from last week, while the number of traders net-short is 5.93% lower than yesterday and 4.90% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests crude oil prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger crude oil price-bullish contrarian trading bias.

Oil - US Crude BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 7% 11% 8%
Weekly -3% 24% 1%
What does it mean for price action?
Get My Guide

Read more: Weekly US Dollar Forecast: Calendar Winds Down into Year-End

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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

DISCLOSURES

News & Analysis at your fingertips.