Oil prices are falling due to an increase in production
In this review, we suggest considering the personal composite instrument (PCI) &GAS/OIL. It reflects the price change dynamics of the US natural gas against the US light crude oil West Texas Intermediate (WTI). Will GAS/OIL prices rise?
Their increase means that natural gas is in greater demand than oil. Currently, oil prices are falling, as OPEC and non-OPEC producer increased the production by 1 million barrels per day. An additional negative factor for the market may be the expected increase in oil production in Libya. The extraction of natural gas in the US is now at a historic high. However, it is in good demand for generating electricity. In turn, the increased power consumption is due to the usage of a large number of air conditioners amid hot weather in the United States. The US reserves of natural gas now amount to 2.262 trillion cubic feet, which is 18.8% below the 5-year average.
On the daily timeframe, GAS/OIL: D1 formed a double bottom and left the falling channel. A number of technical analysis indicators formed buy signals. The further price growth is possible in case of an increase in demand for natural gas in the US and an increase in world oil production.
-
The Parabolic indicator gives a bullish signal.
-
The Bollinger bands have widened, which indicates high volatility.
-
The RSI indicator is below 50. It has formed a positive divergence.
-
The MACD indicator gives a bullish signal.
The bullish momentum may develop in case GAS/OIL exceeds the last fractal high at 0.733. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the 4-year low and the Parabolic signal at 0.673. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (0.673) without reaching the order (0.733), we recommend to close the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
Position |
Buy |
Buy stop |
Above 0,733 |
Stop loss |
Below 0,673 |
Want to get more free analytics? Open Demo Account now to get daily news and analytical materials.
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
GBP/USD rises to near 1.2540, driven by higher UK GDP
GBP/USD edged higher to near 1.2540 during Asian hours on Friday, buoyed by the release of higher-than-expected UK Gross Domestic Product (GDP) data for the first quarter.
EUR/USD: The crucial resistance level will emerge at the 1.0790–1.0800 region
The EUR/USD pair trades on a softer note near 1.0775 during the early European hours on Friday. The downtick of the major pair is supported by the renewed US Dollar demand amid hawkish comments from Federal Reserve officials.
Gold price attracts some buyers despite hawkish Fedspeak
Gold price edges higher for the second consecutive day on Friday. Weak employment data bolstered the speculation that the weakening economy would force the Fed to cut rates.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Rate cut optimism fuelled by higher US jobless claims
With Federal Reserve policy acting as the primary driver of investor sentiment in 2024, renewed optimism surrounding the possibility of rate cuts has propelled the Dow to its most significant rally since December.