Oil in for a pull back?

[Mercury]

I don't see the Triangle as plausible  in terms of the wider move.  Rather I prefer the EWT1-2 retrace but I don't know where it will end (just below recent low or all the way down to 4400?).  My guess is the latter and after tha a strong rally back towards $60 with USDCAD correspondingly dropping to conclude its Wave 4 retrace.  Incidently this would mean that USDCAD puts in a rally back up to the Fib 38% at long last and Friday's rally seems to support this.

 

 

[donaldprice]

True Mercury and glad you mentioned $:Cad, i still think that drop was just W4 and now W5 of C is on the cards all the way to the 38% level, but if that is the case, the oil could potentially go back as you say to the 44 mark, which then would mean that the overall zigzag is still in play. But = a rejection around the 0.88% fib level from W3 would invalidate this view. 



[donaldprice]

No matter what everyone's thoughts are on the OPEC meeting, fundamentally OPEC will probably ramp up production and agree to a cut at the next November meeting, however for me the best trades are long's on this one, as long as price action remain's in the channel. I think for now we may be in a minor retrace of W4 of 1 of 3, but if this surpasses the previous high within the channel then we could see USD-CAD also strengthen as well. Overall most agree that from a technical view we have yet to complete the W5 cycle which may be back to the lows of february. The more oil price rises, the greater the incentive for shale producers to ramp up production and this will become evident during wednesdays oil inventories, although the winter months could act as a safe haven for oil.

Interesting article as well, especially the link between oil and gold.

http://www.reuters.com/article/us-oil-markets-idUSKCN12C0SR?utm_source=twitter&utm_medium=Social

 

 

[donaldprice]

If anybody has traded oil for a long time will get used to taking the oil inventories with a pinch of salt, which is why channels are so useful. Because markets are quite heavily long on this pair at the moment, channels are essential with these trades and therefore was a good buy. Too often politics can dominate economics in this business, hence why we saw this good move today. If we continue on this bullish trajectory, then the next logical target is $53.90. Therefore only interested in longs at the moment until proven otherwise.

 

[Mercury]

The picture on Oil looks a bit unclear to me just now.  I still have a bias towards further gains in the direction of $60 but the pattern is a little suspect at present so we could see further retrace action or a resumption of the rally.  There is no low risk entry so I'm staying out and waiting for further developments. On the other hand USDCAD is looking interesting for a Short, although the upside to the upper Triangle cannot be ruled out, especially if Oil does take a short term dip before rallying.

[CyclingTrader]

Hello,

 

First time posting and I do not profess any particular expertise, however, I do have a willingness to learn and hope that this process of putting thoughts out there might assist in the process.

 

Having looked at the Weekly US Crude it appeared to me that an inverse complex head and shoulders pattern was possibly being made out, though the pattern itself has not confirmed by breaking the neckline.  I did note as well that the neckline in this case is sloping upwards which I am led to believe is related to a lower probability of a successful pattern. If it was then this would be suggestive of a final target in the region of $76-78 a rather bullish prediction given the dearth of production overall in the world.

 

The second chart was my attempt at a shorter term horizon projection of possible significant levels going forward, this does include an assumption that the price will move upwards through the neckline of the pattern and that the general short term trend is upwards.

 

Interested to hear thoughts, I certainly don't mind critique.

 



[donaldprice]

Hi Their Cyclingtrader, from a technical view oil has made a clear head and shoulders and the formation is now very obvious and i do assume that oil will most likely hit the $60+, but fundamentally the price is being driven by OPEC speculation, and not global demand. This is clearly evident with USD CAD, which allegedly has a 70% weight correlation on the currency pair, yet if this is true, why has it not been in line with the same % move and following the DX instead. Either the demand is not their, or traders are focusing more of FED rate expectations. I dont think we should be too pleased either with Chinese data this morning, as no progress has been made and the housing bubble their could seriously spark some severe consequences, hence why the commodity bubble burst back in 2013. Overall bullish on oil only because of OPEC talk speculation and CFTC data suggesting the same, but not because i think the demand is their, not to mention shale drillers will soon be back online again.



[CyclingTrader]

As you mention there are some strange goings on amongst the significant oil producing nations and OPEC are clearly going to a lot of effort to bring Russia round to their way of thinking. The uptrend in oil at the minute just clashes in my mind with two things: one is the level of agreement between oil producing nations which appears to be as water tight as a sieve especially when Iran and Saudi Arabia are diametrically opposed to each other in most everything and second the fact that as oil prices rise they bring more profitability to fracking and tar sands operations driving up production in these areas.

 

Also there are many news stories floating about at the minute around the number of oil tankers fully laden at sea waiting for the price improvement to deliver their cargo which inevitably drives the price back down. It is difficult to see how the up and down pressure will play out at the moment.

[donaldprice]

Absolutely. At present large speculators are Bullish on Oil, but mostly due to the OPEC meeting. At present the price is already set in, and any agreement will only marginally push the price up. But once this agreement is over, then inevitably the economic fundamental set in and this is where you can start charting your inventories and make some significant progress. But with such poor economic data globally from china, to Canada, Australia and Europe of course, it is hard to see continuous US inventory draw downs. Like all things, best to watch you technical and statistical data to make some decent high probability moves.