Four months ago I posted a weekly chart in crude, with a clear message to all short term traders out there: STAY AWAY. I also said that crude will present itself with an excellent buying opportunity in the future. I believe that time is now. Many chartists have recognized the similarity from the 08-09 selloff to the selloff seen in 14-15. It is too obvious to ignore. Based off price action from the 08-09 meltdown, I wanted to see "2-3 months of consolidation" before looking to take any long position in oil. We have seen that consolidation occur from January-March forming a nice base for crude to rebound from. After rebounding from $42 to $57, oil has taken a breather. This is what I would expect to see before advancing higher. Ideally I would like to see oil hold support over $50. From there oil can make its next run up to the 68-75 range. I will soon post a chart delving deeper into details about a possible trade with oil. I will discuss entry points, stops, targets and timeframes.
under this scenario DXY would have to move further down, don’t you think? it is true that the dollar is weakening, but it seems to be more a correction rather than a trend reversal.
Ape
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againstthegrain, thank you for your input and contribution. I would say the dollar is showing signs of topping here. Regardless, of a trend reversal in the dollar I would also point out that oil does not always correlate with the dollar ( compare price action from end of 2009 to mid 2010 of both dollar and oil.) Other factors such as inventory, production and demand will be the main driving forces behind the rise in oil, which I will discuss in detail in my next chart.
AMBRISH
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THANKS FOR NEW POST,
Ape
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Anytime! If you want any other chart just ask!
AndyM
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Hi, thanks for sharing!
While oil is rising it still does not look like a rebound as there is no clear upward impulse. Worth noting that the situation with physical oil storage is close to critical. Cushing is at 90% capacity utilization and rising. Oil tanker rental costs have spiked in the last quarter because oil trading companies have to rent tankers instead of keeping oil on the ground - there is simply no more storage left! This means that we may soon reach a point of breakdown when traders would dump the futures at any cost because they will not be able to fulfill the physical purchase obligations.
Ape
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AndyM, thank you for your input! First let me say this is the very early stages of a trend reversal. I understand your concerns about storage issues, however I would counter that inventories have been rising less then expected which has fueled oil to rebound 35% from its lows of $42 in one months time. In order for crude to continue its' momentum oil will have to see continued sluggishness in production and inventory levels. First signs of trouble will be oil sliding back below $50