Best analysis

One of our persistent biases last week was that the US Dollar rally was due for a breather after strengthening dramatically over the previous few weeks. That theme played out nicely in some markets (USDJPY, USDCAD, AUDUSD, Gold and Oil), but failed to develop in other markets (EURUSD and USDCHF). Regardless, the scene may now be set for another leg higher in the greenback across the board, assuming this week’s high-impact US data cooperates.

One of the most actionable setups at this point could be in WTI, which is in freefall today after bouncing back to 96.00 last week. As we noted two weeks ago, a multi-month Head-and-Shoulders pattern suggests that the commodity could still see further downside toward 90.00 over the medium-term (see “WTI: Could Oil Hit its H&S Target at 90.00?” for more). More immediately, prices are putting the finishing touches on a clear Evening Star candlestick pattern; this relatively rare 3-candle reversal pattern shows a shift from buying to selling pressure and is often seen at near-term tops in the market.

Beyond the price itself, the other technical indicators are also painting a bearish picture. Last week’s bounce stalled out directly at the shallow 23.6% Fibonacci retracement and the downward-sloping 20-day MA, which has consistently put a cap on oil over the last two months. Meanwhile, the MACD remains well below the “0” level, showing generally bearish momentum, while the RSI has bounced out of oversold territory, potentially opening the door for another leg lower from here.

To the downside, bears may look to take the pair back to the August lows at 92.50 next. If bears can maintain the upper hand, the 16-month low at 91.25 and the H&S measured move target near 90.00 could come into play later this month. On the other hand, bulls likely want to see if WTI can regain its 20-day MA and the 96.00 handle before committing to medium-term buy trades.

* An Evening Star candle formation is relatively rare candlestick formation created by a long green candle, followed a small-bodied candle near the top of the first candle, and completed by a long-bodied red candle. It represents a transition from bullish to bearish momentum and foreshadows more weakness to come.

WTI

Source: FOREX.com

General Risk Warning for stocks, cryptocurrencies, ETP, FX & CFD Trading. Investment assets are leveraged products. Trading related to foreign exchange, commodities, financial indices, stocks, ETP, cryptocurrencies, and other underlying variables carry a high level of risk and can result in the loss of all of your investment. As such, variable investments may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall Witbrew LLC and associates have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to investment trading or (b) any direct, indirect, special, consequential or incidental damages whatsoever.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends the recovery to near 1.3200 in European trading on Thursday, having found buyers near 1.3150. A fresh US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements. 

GBP/USD News
EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD is well-bid near 1.1150 in the European session on Thursday. The pair is underpinned by the renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price regains positive traction following the previous day's pullback from the all-time peak and builds on its steady intraday ascent heading into the European session on Thursday. 

Gold News
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin and Ripple eye for a rally as they break and find support around their resistance barrier. Meanwhile, Ethereum demonstrates signs of recovery as it approaches a critical resistance level, indicating that an upward rally could be on the horizon if it successfully breaks through.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures