I analyzed this oil chart to help with my analysis of USD/CAD. The loonie tends to rise and fall with the price of oil since oil is their number 1 export product. Meaning if oil rises in price USD/CAD will tend to fall in price and vice versa. While most traders are calling for USD/CAD to drop based on long term charting, short term, I'm still expecting USD/CAD to rise a bit yet. Especially after analyzing this oil chart. Both instruments appear to be forming flags at their respective levels. However, global oil demand is down and production appears to be up. This would tend to support my position that oil is more likely to fall in price than rise. At the same time, western governments continue to do exactly the opposite of what's required to stimulate their respective economies. Therefore, I expect in the long term oil prices will probably fall in response to their respective economic policies.
Based on this chart I would be looking to short oil above or just below the $50.00 level. If it makes a sustained move higher than the lower trend line I drew, it will break the flag pattern that appears to be forming below it and at that point re-analysis would be required to confirm my suspicions.
Keep in mind that macro economic analysis is like making a 180 degree turn with an aircraft carrier. It takes awhile. Therefore, you should ONLY be looking for long term trade in this instrument! It may not move lower until 3rd quarter 2017 or it may move lower next month or it may break the pattern entirely and move higher back into the long term bear flag above the lower trend line. We can't know that by looking at a chart! However, adding all these factors together suggests LOWER to me. A bounce or two lower off that lower trend line will tend to confirm the analysis. Good luck with your trading!
Based on this chart I would be looking to short oil above or just below the $50.00 level. If it makes a sustained move higher than the lower trend line I drew, it will break the flag pattern that appears to be forming below it and at that point re-analysis would be required to confirm my suspicions.
Keep in mind that macro economic analysis is like making a 180 degree turn with an aircraft carrier. It takes awhile. Therefore, you should ONLY be looking for long term trade in this instrument! It may not move lower until 3rd quarter 2017 or it may move lower next month or it may break the pattern entirely and move higher back into the long term bear flag above the lower trend line. We can't know that by looking at a chart! However, adding all these factors together suggests LOWER to me. A bounce or two lower off that lower trend line will tend to confirm the analysis. Good luck with your trading!
