NYMEX:CL1!   LIGHT CRUDE OIL FUTURES
Crude started the new year with volatility, as prices initially rebounded into price resistance near $38/bbl on geopolitical tensions between Iran and Saudi Arabia. However, the rally was short-lived and there looks to be no follow through in today's session.

There are a few key factors to take into account: slow global growth, a decline in global demand growth and a supported dollar.

As posted here and here, near-term resistance is near $38/bbl which has been tested and failed twice in the last two days. Technical breadth still remains negative, and the lower have of the demand zone is the next area of support between $33-34/bbl.

snapshot

If the bottom of the range breaks, $27 is open for the taking. As mentioned in August:

"On a market technician's viewpoint, if fundamentals do not shape up quick with support from consumption economies, like the U.S. and China, crude could break 2009's low of $33.20 per barrel.

I also expect the dollar to continue to rise, increasing deflationary pressure throughout 2016.

Price support is currently $42.02, just $2.22 per barrel less from where it is trading today. 2008's high of $147.27 per barrel creates a "V" shaped support and resistance price channel, which will likely hold prices.

If prices break through this key support level, selling could amplify if there is no catalyst to bring prices back north. A "demand" zone - an area where confirmed buying took place - between $38.34 and $34.04 will be the last line of defense for crude prices.
A close below this level, and a target of $27.14 per barrel is initiated."

Take it back further to last February:

"A bottom in crude will be formed when a series of indicators and data show confluence."

"Growth has been lacking, and it is concerning that China – the largest consumer of oil             – is showing real signs of trouble. GDP recently hit two decade lows, and the most recent import/export data is troubling. China saw a 3.3 percent decline in exports and a whopping 19.9 percent decline in imports YoY, the worst since 2009. It was was 16 percent lower than the general consensus.
There is also disinflation. Whether it is in the US, Eurozone, or China, prices for commodities will remain low. Crude is no exception.

A bottom in crude will not likely begin until fundamentals mingle with price action. Inventory builds of 5, 6, 10 million barrels per week will not help the case for higher prices, and oil             companies could be forced to further slash rigs, jobs and CAPEX.
And considering the deteriorating economic data, more so in the US, 2008’s low could be retested."

If bulls could retake momentum , upside potential could reside at $42.75 and, potentially, $48.55. The situation remains dynamic as an unexpected production cut from a large producer could spark huge short-covering (unlikely to change long-term sentiment). Although, OPEC and Russia look to remain active, while production in the US is still near historical highs.

Please feel free to comment and share charts! And follow me @Lemieux_26

Check my posts out at:
http://bullion.directory/about-bullion-directory/christopher-lemieux/
http://www.investing.com/members/200193197
http://www.teachingcurrencytrading.com
http://oilpro.com/chrislemieux
Big fan of you work. nicely done sir.
+1 Reply
CommoditiesTrader smitheric1970
11 months ago
Thank you! I'm glad you enjoy it :D
Reply
jangseohee
11 months ago
Happy 2016, great to see you back
CL1!, monthly channel support?

AMZ, bottoming


i reckon bottoming is in.. but whether it spring up as fast, that i don know
still waiting for good signal to go massive long
+1 Reply
CommoditiesTrader jangseohee
11 months ago
Thanks! I actually been looking at the little wedge on your top chart. I don't deny that there is potential for trades to the upside, like we saw last year. And, eventually, there will be a great longer-term trade in oil.

However, I'm kind of looking at this in a macro sense. There is barely any growth worldwide, and that's expected to continue to decline. I'm still looking at a recession in the US between Q2-3. If we look back to the great recession, deflation occurred and crude consumption cratered.

I think a 2009-14 rally can happen if: large producers significantly cut production, massive US shale consolidation, large increase in inflation or a rebound in growth, or a combination of a few.

We have to keep in mind, this is oil while the world is growing. What happens when it's not? Who knows. Definitely important to remain nimble.
+1 Reply
jangseohee CommoditiesTrader
11 months ago
well said,
i am looking at macro trading, though not fundamentally.. that blue support line - if touch is around 31.8-32.5 depend on time
worst case also been considered
CL1!, drop to channel bottom?
+1 Reply
The QE period is almost ridiculous in terms of oil prices... hmmm....
snapshot
+2 Reply
CommoditiesTrader smitheric1970
11 months ago
It's hard to say what could happen, as we can only take in current information in relation to similar times in history. I've said that commodities in general could rip higher if the Fed does QE4. I believe it is the only way for them to quell higher dollar and equity meltdown.

If 2014 high is taken out, $105 on the DXY is next stop more so if the Fed keeps blabbing about rate hikes when combined by global fx devaluation.
+1 Reply
jangseohee CommoditiesTrader
11 months ago
gotcha
Reply
jangseohee
11 months ago
sound crazy and non logical
i have turned long on coal, gold, silver mining and oil related stocks
+1 Reply
CommoditiesTrader jangseohee
11 months ago
Hey, betting against subprime was crazy and illogical lol. I think those plays will definitely play out when the dollar reverses course.
+1 Reply
jangseohee
11 months ago
if UKOIL and USOIL moves in tandem, still a little bit downside
snapshot
+2 Reply
CommoditiesTrader
11 months ago
XLE looks like there could be more downside to retest with a large H&S?

snapshot



XLE Broke Significant Support on Crude Price Woes
+1 Reply
jangseohee CommoditiesTrader
11 months ago
you are using linear chart
+1 Reply
jangseohee
11 months ago
it is never good to do prediction but i thought i am seeing this
log chart
snapshot
Reply
jangseohee
11 months ago
snapshot

snapshot

the top in Ucad will be bottomed in Oil
+1 Reply
CommoditiesTrader jangseohee
10 months ago
Only question is when...
+1 Reply
jangseohee CommoditiesTrader
10 months ago
i will wait for monthly doji or shooting star
+1 Reply
CommoditiesTrader jangseohee
10 months ago
I definitely think that the mean reversion in this (and other assets) will be immense. I posted a SPY chart 15 months ago and predicted a 71% decline to $58ish at that current level. SocGen's Albert Edwards, who predicted the Asian Crisis, said SPX could fall 75%.

It's quite possible, and if you look at historical SPX multiples, the most compelling reset point is around 10x P/E
+1 Reply
jangseohee CommoditiesTrader
10 months ago
what is the current P/E for SPX?
+1 Reply
CommoditiesTrader jangseohee
10 months ago
Depends.

Plain P/E is 19.50, still historically high. Shiller PE which takes into account 10 years of earnings is super high at 23.34. They are both rolling over as if were are now destined for a bear market. No doubt.
+1 Reply
IndonesiaBankTrader
10 months ago
OIL
+2 Reply
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