Crude Oil Technical Analysis

Crude Oil Technical Analysis: Aiming to Extend Down Move

Talking Points:

• Support: 50.66, 48.54, 45.11
• Resistance: 52.37, 54.08, 56.20

Crude oil prices look poised to extend losses after a drop through the March low delivered the weakest levels in six months. From here, a daily close below the 61.8% Fibonacci expansion at 50.66 exposes the 76.4% level at 48.54. Alternatively, a reversal above the 50% Fib at 52.37 opens the door for a test of the 38.2% expansion at 54.08.

KEY UPCOMING EVENT RISK:
03 AUG 2015, 12:30 GMT – US PCE Core (YoY) (JUN) – Expected: 1.2%, Prev: 1.2%
03 AUG 2015, 14:00 GMT – US Manufacturing ISM (JUL) – Expected: 53.5, Prev: 53.5
05 AUG 2015, 01:45 GMT – Caixin China PMI Composite (JUL) – Expected: n/a, Prev: 50.6
05 AUG 2015, 14:00 GMT – US Non-Mfg ISM Composite (JUL) – Expected: 56.2, Prev: 56.0
07 AUG 2015, 12:30 GMT – US Change in Nonfarm Payrolls (JUL) – Expected: 225K, Prev: 223K

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Talking Points:

• Support: 48.22, 45.11, 41.68
• Resistance: 51.34, 53.27, 56.39
• Visit our crude oil page for more

Crude oil prices may be preparing to launch higher after prices put in a Bullish Engulfing candlestick pattern. Near-term resistance is at 51.34, the 14.6% Fibonacci retracement, with a break above that on a daily closing basis exposing the 23.6% level at 53.27. Alternatively, a turn below the 48.22-54 area (76.4% Fib expansion, August 10 low) clears the way for a challenge of the 45.11-17 zone (100% expansion, January 13 low).

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Talking Points:

• Support: 48.22, 45.11, 41.68
• Resistance: 51.34, 53.27, 56.39
• Visit our crude oil page for more

Crude oil prices put in a Bullish Engulfing candlestick pattern, hinting a move higher may be brewing ahead. A daily close above the 14.6% Fibonacci retracementat 51.34 exposes the 23.6% level at 53.27. Alternatively, a move below the 48.22-54 area (76.4% Fib expansion, August 10 low) opens the door for a test of the 45.11-17 zone (100% expansion, January 13 low).

KEY UPCOMING EVENT RISK:
19 AUG 2015, 12:30 GMT – US Core CPI (YoY) (JUL) – Expected: 1.8%, Prev: 1.8%
19 AUG 2015, 18:00 GMT – Fed Releases July FOMC Meeting Minutes
19 AUG 2015, 14:30 GMT – DOE US Crude Oil Inventories – Expected: n/a, Prev: -1682K
20 AUG 2015, 06:45 GMT – Fed’s John Williams Speaks
21 AUG 2015, 00:20 GMT – Fed’s Narayana Kocherlakota Speaks
21 AUG 2015, 01:45 GMT – Caixin China Mfg PMI (AUG P) – Expected: 48.0, Prev: 47.8


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Talking Points:

• Crude Oil Prices Vulnerable to Deeper Losses After Support Break
• Sellers Now Eye Support Above $45 Figure en Route to August Lows

Crude oil appears poised for deeper losses after prices slipped below chart support above the $47/barrel figure. The Brent crude contract found resistance below the $55/barrel figure and turned downward having launched a sharp corrective recovery after plunging to a six-year low in late August.

From here, a daily close below the 50% Fibonacci expansion at 45.58 opens the door for a test of the 61.8% level at 43.52. Alternatively, a move back above the 38.2% Fib at 47.63 clears the way for a challenge of falling trend line resistance set from the August 31 high, now at 49.24.

KEY UPCOMING EVENT RISK:
10 SEP 2015, 15:00 GMT – DOE US Crude Oil Inventories – Expected: n/a, Prior: 4667K
11 SEP 2015, 12:30 GMT – PPI (YoY) (AUG) – Expected: -0.9%, Prev: -0.8%
11 SEP 2015, 14:00 GMT – UofM Consumer Confidence (SEP P) – Expected: 91.2, Prev: 91.9

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Talking Points:

• Crude Oil Technical Strategy: Pulling Away From Long-Term Support
• Momentum Shows Oil May Still Have Room to Run Higher
• Next Big Test Remains at 200-DMA For Long-Term Directional Bias

WTI Crude Oil price punched higher toward three-week highs today. There was speculation by U.S. refineries that crude demand was increasing alongside a trend of lower production caused a clean bid in Crude. The rise was in stark contrast to other commodities, namely metals that ended the day in the red by 1% or greater. However, the 3.8% move higher in crude is aligning with a stabilization in economic data, which is beginning to chip away at the fear of supply remaining on the market due to falling economic data.

The Daily crude oil price chart is bouncing aggressively off the $43 per barrel support zone (yellow box on chart). Many technicians would point to the break below the yellow boxed support zone as an invalidation of the uptrend and the argument that we’re heading higher. Of course, it’s easy to point to the SPX500 that has risen near new highs after the aggressive sell-off on August 24th. If Oil goes the way of equities and we continue to hold above the $43 per barrel price, the case for a retest of the 200-day moving average near $51 per barrel becomes increasingly strong followed by the 100% Fibonacci extension near the top of the blue price channel near $55 per barrel. Additionally, the relative strength Index on the bottom of the chart shows there is likely still room to run higher


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• "The pressure in Oil seems to be unrelenting. On Friday, the market got wind of the Baker Hughes rig count that jumped by 17 (meaning more production in an oversupplied market), and prices dropped yet again. The trend is definitively lower, but traders without exposure in the market may want to keep an eye on a few signs that a short-term bottom could be forming, at least for US Oil. While we often discuss the US benchmark for Oil, West Texas Intermediate Crude, the international benchmark for Oil recently broke below its 2008 low. The December 2008 low for Brent Oil was $36.20, and this week’s low was $36.05, $0.15 below the 2008 low."
• "Turning to the price of US Oil, you can see we have seemed to find a sticking point north of $33.50/bbl, the 2009 low. Just below there is the December 2008 low at $32.40. We will continue to focus on this price zone as support. However, there are other technical forces that may act as support for testing those levels."
• "First, you will notice that two key points are converging on two Andrew’s Pitchforks drawn off prior key pivots. The Red Pitchfork is drawn over a longer time-frame whereas the Black Pitchfork is more precise because the span of points is tighter and covers a smaller range. However, the median line of the shorter-term Pitchfork has aligned with, the lower parallel line of the longer term pitchfork at a point that additionally aligns with a Fibonacci 1.272% extension. This bounce off support is by no means enough to call a bottom in Oil, but rather a potential relieve rally back to the August 24th low & December 15th high of $37.73-$37.86/bbl. End of year seasonal tendencies favors US Dollar weakness, which may support Oil further."
• "Lastly, you can see RSI (5) pushing on trendline resistance. A break higher could further show a relief rally is underway. Momentum has stalled to the downside, even as price pushed further down, which can indicate some reversal on the horizon. If RSI(5) does unwind, and a move higher develops, it would be worth keeping an eye on the resistance levels of the December 15th high, and move our sights to the $40.00/bbl level where we recently accelerated lower on December 7th. A break of $40.00 on a closing basis would be the first decent signal of a more significant turn, which aligns with an Elliott Wave count we have been tracking, that could see us test upper $50s in Q1 2015."

Daily price for Gold (XAU/USD) is on primary bearish market condition for the breaking 36.29 and 35.93 support level for the bearish trend to be continuing. The price was on the bearish breakdown since the beginning of November this year by breaking Ichimoku cloud from above to below together with 46.45/42.18 key levels. Price was stopped by 36.29/35.93 support levels to start with the secondary ranging within the levels.

If the price breaks 35.93 support level so the primary bearish will be continuing.
If the price breaks 39.68 resistance level so we may see the local uptrend as the secondary market rally within the primary bearish market condition.
If the price breaks 46.45 resistance level so the price will be started to be reversed from the primary bearish to the primary bullish condition with the secondary ranging.
If not so the price will be ranging within the levels.

• Recommendation for long: watch close the price to break 30.68 for possible buy trade
• Recommendation to go short: watch the price to break 35.93 support level for possible sell trade
• Trading Summary: bearish

Resistance	Support
39.68	36.29
46.45	35.93

SUMMARY : bearish

TREND : ranging

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Could oil prices collapse to $20?

"The short answer is ‘yes.’ We believe that crude oil prices could fall further unless global oil production is reduced. As shown in Table 2, we estimate that the global oil market could be oversupplied by roughly 920,000 bpd in 2016. The key assumptions are year-over-year growth in global demand of 1.2 million bpd, Saudi Arabia, Iraq and Libya hold production at current levels, Iran ramps up production at moderate pace over the course of the year and the U.S. rig count remains at current levels."

the source

• "A mysterious even happened as markets opened in 2016. Oil rose. Nevertheless, before lunch would ring in London on January 4, the first trading day of 2016 Crude fell."
• "There was a confluence of resistance at the $38/bb zone that saw Crude post a bearish Shooting Star formation. However, the most notable part of that zone of resistance is that the zone includes the August 24 closing low. When past support acts as new resistance that can be a prelude to a very strong move. Fundamentally, the rise in Oil was blamed on tensions between Saudi & Iran. However, it seems that the disagreement between the two Oil-producing nations shows there is a lack of supply control, which very well may continue to add to price pressure on the commodity."
• "Of course, this aligns with rising non-OPEC supply from Russia & the United States which aligns with the bearish technical picture. If there is a bullish note on Oil, it has to do with Institutional Positioning as Hedge funds close out 14,699 bets that crude oil will fall according to Commodity Futures Trading Commission data. However, short covering and new longs are not the same things, and Oil is mainly seeing the former in play."

As we see from the chart above - crude oil is on bearish market condition with the secondary between 23.6% Fibo resistance level at 39.39 and Fibo support level at 34.79.

• If the price will break 39.39 resistance level so we may see the local uptrend as the secondary bear market rally to be started.
• If price will break 34.79 support so the bearish trend will be continuing.
• If not so the price will be ranging within the levels.

• Recommendation to go short: watch the price to break 34.79 support level for possible sell trade
• Recommendation to go long: watch the price to break 39.39 resistance level for possible buy trade
• Trading Summary: ranging bearish

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Crude Oil: 34.00/33.90 is the next target area

Intra-day price is located below 100 period SMA (100 SMA) and 200 period SMA (200 SMA) in the primary bearish area of the chart. The price was on the bearish breakdown ansd it was stopped by 27.06 support level for the bouncing to be started: the price is on the local uptrend as the bear market rally by the symmetric triangle pattern to be broken to above for the rally to be continuing. The price is located within the following support/resistance levels:

• 32.32 resistance level located near 100 SMA and below 200 SMA on the border between the primary bearish and the ranging bearish market condition, and
• 35.95 resistance level located near and above 200 SMA in the beginning of the bullish area of the chart, and
• 27.06 support level located far below 100 SMA/200 SMA in the primary bearish area.

RSI indicator is estimating the secondary ranging market condition.

• If the price will break 32.32 resistance level so we may see the ranging condition within the primary bearish with 35.94 target to re-enter.
• If the price will break 35.94 resistance level so the reversal of the intra-day price movement from the primary bearish to the primary bullish trend will be started.
• If price will break 27.06 support so the primary bearish market condition will be continuing.
• If not so the price will be ranging within the levels.

Resistance	Support
32.32	27.06
35.94	N/A

The Medium-Term Strategy: watch close price to break 32.32 resistance level for possible buy trade. Alternateve - watch price to break 28.78 support level for possible sell trade.

The Long-Term Strategy: watch close price to break 35.94 resistance level for possible buy trade. Alternateve - watch price to break 27.06 support level for possible sell trade.