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Oil (WTI) Technical Review

Quick-View: Long 4-Hour WTI Crude Oil trends that are over-bought may create intra-day short reversals, but seem unlikely to change the overall long trend. The Oil outlook remains bullish in light of heightened Middle Eastern tensions. Countries that have natural reserves in oil are initiating moves away from excess holdings of USD paper (Treasury bills or dollar notes) as their currency reserve, in a long-term plan that reduces exposure to USD devaluations.

It make little sense to have dollar-denominated reserves in the ground and in the bank vault as well, especially when your major trading partner is also the US. If the USD depreciates, so will the reserves of the oil producing countries. Saudi Arabia has started a move towards Euro Paper, and most other oil exporters are re-aligning as well, including Russia, and Venezuela, who are following Iran in asking for Euro dollar payment. It will be very interesting to see how this all plays out over the coming months.

Long and Short: Bull or Bear, trader or investor, the following review covers both sides of Oil market technical potential. What happens from a fundamental perspective is all down to shifting daily momentum, in-line with breaking economic and news headlines. Reactive markets require reactive analysis, and an ability to accept changes as they happen. A steadfast opinion is not always an asset in the roller-coaster global trading arena.

Trend: Long Momentum: Mixed Sentiment: Mixed Daily Trading Range: Extreme $3.50 (4.4%) 

Daily Simple Moving Average Lines: Blue (20 SMA) Green (50 SMA) Orange (100 SMA) Red (200 SMA)        

Technical Wave: The first leg of an ABC-Up structure formed back in September with the move from 74.50 to 86.50, the B-leg reversed to 83.00 and held support, which set up the C-leg that targeted 104.00. Now is the time to look for consolidation at support in preparation of the next move towards resistance, before the next sustainable moves unfold. The 95.50 and 104.50 area are main swing points of note.

 

4-Hour OIl (NYSE:<a href='https://seekingalpha.com/symbol/WTI' title='W&T Offshore, Inc.'>WTI</a>)

4-Hour Oil (WTI)

Buy Support: 
Bullish traders will be looking to potentially buy the short reversals to 99.30 (the Fibonacci trend-line formed from the move higher from 74.50 to 103.50), which could then target 102.50 and possibly 104.50. 

Sell Resistance: Bearish traders will be looking to potentially sell long tests of resistance around 104.00 (the recent swing point high), which could then target 102.50. 

Overall: Oil trade has lost the strong intra-day correlations to moves on the S&P 500, which has created violent intra-day WTI trading conditions. The intra-day trading range is extreme and signals massive volatility remains a constant threat.   

This Week: Selling at resistance could be seen if equity markets show any weakness. News-headline related moves are dominating any and all technical potential. The global outlook is mixed, with the path of least resistance likely to be consolidation and moves higher.       

 



Information, analysis and methodologies provided are for informational purposes only, obtained from sources believed to be reliable, and should not be used as a replacement for research by an individual investor or licensed investment professional. In no event should the content of this correspondence be construed as an express or implied promise, guarantee, or implication that profits or losses can be made or limited in any manner whatsoever. No guarantee of any kind is implied or possible where projections of future conditions are attempted.