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Crude Oil Price Forecast Not Aligning with Commodity Currencies

Crude Oil Price Forecast Not Aligning with Commodity Currencies

2017-08-21 19:34:00
Jeremy Wagner, CEWA-M, Head of Education
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This is a recording of a US Opening Bell webinar from August 14, 2017.

In this recording, we mention positive risk to reward ratios. Learn more about them and why they are important with this Traits of Successful Traders guide.

In today’s US Opening Bell webinar, we discussed technical Elliott Wave patterns on several key markets for this week. Some of the key markets we analyzed (not in this order) include gold, oil, Dow Jones Industrial Average, USD/CAD, AUD/USD, NZD/USD, EUR/USD, USD/JPY.

One theme I want to reiterate in the text here is how the commodity currencies (AUD/USD, USD/CAD, NZD/USD) are carving what I am seeing as USD strength patterns. Last week we wrote how a AUD/USD longer term downward correction may be resuming. Likewise, USD/CAD bounce from 1.24 target appears incomplete to the upside. However, crude oil appears to have a medium term bullish bias to it. As a result the commodity currencies are not necessarily lining up with the crude oil chart. As I stated in the webinar recording, I prefer USD/CAD and its pattern at this point due to the clarity of entry and risk opportunity.

Dow Jones Industrial Average is a market which I see a pattern to where it may pivot higher from nearby price levels, but many of the models are pointing towards deeper levels of retracement. We are anticipating a DJIA correction down towards 20,000-20,400 to be normal under the current pattern.

Gold prices pivoted just below $1296 resistance keeping the door open for one last dip in the triangle pattern. If such a dip occurs, we are looking to the $1215-$1245 price zone as a terminal zone for the triangle. We are anticipating the triangle consolidation to give way to higher prices towards $1345.

Crude oil prices continue to grind sideways in a larger triangle. The near term pattern is a little unclear which suggests the longer term triangle is still in play. For more study on how to identify and trade Elliott Wave triangles, register and watch this hour long webinar recording.

The bullish pattern in EUR/USD appears incomplete. Therefore, we will look to buy dips in the pair on an eventual retest of 1.19. It appears we may be getting close to the end of a third wave in an impulse (view a webinar recording on impulse patterns, how to identify and trade it). If so, then prices may begin softening a bit towards 1.12-1.13 in a fourth wave in the coming days.

IG client sentiment for EURUSD has remained net negative since April 18. This trend of 76% traders net short supports the longer term trend being to the upside. The current sentiment reading is -3.18. View the live trader positioning.

Check out our quarterly forecasts for USD, EUR, JPY, Gold and Oil back in late June.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Discuss these markets with Jeremy in Monday’s US Opening Bell webinar.

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

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