Near term crude oil outlook:
In the Dec 12th email, once again said there was still no confirmation of even a short term bottom "pattern-wise" (5 waves), arguing further downside. The market has indeed continued lower, currently consolidating from the Dec 16th low at $53.60. At this point, there is still no confirmation of a low while the downside pattern from at least the Nov 21st high at $77.83 is not "complete" (last week of consolidating is seen as wave 4, see daily chart below), and in turn suggests further downside below $53.60 ahead. However, lots of bigger picture positives are evident and suggests that further such lows (if they do indeed occur) may more limited, and versus the start of more substantial, new declines. Note that the market is very oversold after the huge tumble from the June high at $107.73, the seasonal chart bottoms around this time (see 3rd chart below), the US$ is seen nearing an important top (see email from Tuesday), and the market is within longer term support (see long term below). Nearby resistance is seen at $58.75/25 (top of multi-day range, broken base of bear channel from Sept). Bottom line: potential for multi-month correction rising, but still no confirmation of even a shorter term low.
Strategy/position:
With no confirmation of even a shorter term low "pattern-wise" so far, would be looking to trade from the short side. But given the rising risk for a more important bottom, would only do so if much more aggressive, and using tight stops to maintain a good overall risk/reward. So for now, would try to sell a bounce toward $57.25 (higher entry lower risk), and in that case stopping in a close $.25 above that broken base of the channel since Sept. But will want to get much more aggressive on new lows. A final note, the market may never reach this sell area but just not seen as a good risk/reward in hitting bids here. Remember, positioning is driven by risk/reward and will at times mean missing moves.
Long term outlook:
As discussed above lots of bigger picture positives are evident, while the market is within longer term support at the base of the bearish channel since Aug 2013 (currently at $51.50/$53.50), a potential area to form a bottom for at least a few months. But in the very long term, such a multi-month bottom would likely be an extended period of ranging (wave IV in the fall from the Aug 2013 high at $112.24) and with eventual new lows after (within wave V, see in red on weekly chart/2nd chart below). But at this point, there is no confirmation of even a shorter term low so far (though one is seen approaching rapidly). Further long term support below $51.50/$53.50 is seen at the bullish trendline from Dec 1998 (currently at $44/46). Bottom line : potential rising for a broader period of wide consolidating (3-6 months), but still no confirmation of even a shorter term low.
Strategy/position:
Looking for confirmation of at least a short term low to switch the longer term bias to bullish.
Current:
Nearer term : only if more aggressive, sell a near term bounce toward $57.25.
Longer term : potential rising for few months of consolidating, no confirm of final low so far
In the Dec 12th email, once again said there was still no confirmation of even a short term bottom "pattern-wise" (5 waves), arguing further downside. The market has indeed continued lower, currently consolidating from the Dec 16th low at $53.60. At this point, there is still no confirmation of a low while the downside pattern from at least the Nov 21st high at $77.83 is not "complete" (last week of consolidating is seen as wave 4, see daily chart below), and in turn suggests further downside below $53.60 ahead. However, lots of bigger picture positives are evident and suggests that further such lows (if they do indeed occur) may more limited, and versus the start of more substantial, new declines. Note that the market is very oversold after the huge tumble from the June high at $107.73, the seasonal chart bottoms around this time (see 3rd chart below), the US$ is seen nearing an important top (see email from Tuesday), and the market is within longer term support (see long term below). Nearby resistance is seen at $58.75/25 (top of multi-day range, broken base of bear channel from Sept). Bottom line: potential for multi-month correction rising, but still no confirmation of even a shorter term low.
Strategy/position:
With no confirmation of even a shorter term low "pattern-wise" so far, would be looking to trade from the short side. But given the rising risk for a more important bottom, would only do so if much more aggressive, and using tight stops to maintain a good overall risk/reward. So for now, would try to sell a bounce toward $57.25 (higher entry lower risk), and in that case stopping in a close $.25 above that broken base of the channel since Sept. But will want to get much more aggressive on new lows. A final note, the market may never reach this sell area but just not seen as a good risk/reward in hitting bids here. Remember, positioning is driven by risk/reward and will at times mean missing moves.
Long term outlook:
As discussed above lots of bigger picture positives are evident, while the market is within longer term support at the base of the bearish channel since Aug 2013 (currently at $51.50/$53.50), a potential area to form a bottom for at least a few months. But in the very long term, such a multi-month bottom would likely be an extended period of ranging (wave IV in the fall from the Aug 2013 high at $112.24) and with eventual new lows after (within wave V, see in red on weekly chart/2nd chart below). But at this point, there is no confirmation of even a shorter term low so far (though one is seen approaching rapidly). Further long term support below $51.50/$53.50 is seen at the bullish trendline from Dec 1998 (currently at $44/46). Bottom line : potential rising for a broader period of wide consolidating (3-6 months), but still no confirmation of even a shorter term low.
Strategy/position:
Looking for confirmation of at least a short term low to switch the longer term bias to bullish.
Current:
Nearer term : only if more aggressive, sell a near term bounce toward $57.25.
Longer term : potential rising for few months of consolidating, no confirm of final low so far
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.