A Note before reading - this is a forecast analysis - based upon our trading strategy. This is tagged long, due to purchasing further increments upon imbalances.
Please do not take this as face value and conduct the relevant investment strategy to successfully trade the probabilities.
A scenario is needed, as well as a , this is a game of patience.
For further charts - refer to the previous analysis with cross asset screenshots
Master Key for zones
- Blue = Monthly
- Purple = weekly
- Scarlet - Four day
- Orange = Daily
- Magenta = 8 Hour
- Grey = 4hour
- Pink = 1 hour
Price has currently filled a monthly imbalance, with a new fresh imbalance zone awaiting price action to occur. The probabilities are strong here for price to enter into this zone, purely based on the candle wick which has been confirmed from February 2021. The wick on the lower time frames has provided evidence of this reaching a point at $59.20 per barrel. [Using the in reference here]. Price had created an engineered low, for the shakeout of the sellers who are looking for sells of the fresh "high". Note, on the daily, the is well respected with the three soldier candle pattern 'identified as a sell off", however, this is a perfect opportunity to add a long.
The monthly imbalance - is still showing the respective low as explained above. The price of oil has continued to show it's strength reaching the next liquidity wick fill at $66.34-54. Now, the next important imbalance zone is yet to be breached and tested. Price can now create a fresh test of the monthly chart, applying as to what the structure on the monthly is showing is, the price can have a high probability of moving back to $60.00 - $62 zone to create a solid rally base rally formation setup.
Weekly Imbalances applied:
Bearish Weekly Scenario:
Where price is now entering a fresh imbalance - this is a great opportunity to close out long positions which have been held in a shorter run up or simply close out profits to de-risk and transfer the risk by offsetting shorts.
Why? - Simply put, fresh zone is a clear opportunity for the imbalance to occur. The imbalance will be closed out and the market structure will offer a new opportunity. Price can dramatically collapse again with a strong supply, however where price is still showing "long". Oil can be sold off to weekly imbalances or in a worst case scenario to the below Blue, monthly imbalance.
Weekly Imbalances - still active zones.
The Weekly imbalance provides a good indicator her where price can create a weekly supply or sellers imbalance as the zone is a fresh touch. The probability of price retracing from the newly created high, is a strong possibility. However, as there is a zone higher, Oil can still use this imbalance as a base, to create strong price action floating within a range of $67-60 per Barrel. Look into the smaller time frames for assessing the risk of entering a trade.
Eight hour Fibonacci, imbalance
Below are the eight hour imbalances, where a great structure has taken place to provide an opportunity for the base to built upon. The imbalance here will attract the short sellers and scalpers and hedged sellers to cover longs. However the 50% retrace zone aligns perfectly to a strong indicator of where Fibonacci lines mock up a solid alert to monitor the minor inefficiency taking place here. however be aware for the weekly zone below this is only a short term hedge for buys to capture both sides of the trade.
Price will have a high probability to fall towards $58-59 per barrel.
Daily imbalance - for a simplified view
Again the imbalance of the monthly aligns with the daily low, so take into account here a inflow opportunity for the building up of a buying imbalance at around $59-60. XX then initiate a buy order.
Understanding the context behind Oil with the "disastrous" negative price of the Oil crash.
We have seen a nice impulse into the channel and a rejection upon reaching the trendline at $53.00
Good question, based on the fact - from a technical standpoint - the sell off back in February, March 2020 - reversed on a point within the market structure to the crisis of Oil supply being heavy weighted in comparison to the demand . The spike to zero was the abundance of supply which effectively the storage supply became over saturated and "worthless", the May contracts were not accepted for physical delivery and the paying for the delivery took place to prevent further storage.
This imbalance was created in which created the impulse. Price re-established itself with $30-36 zone for a further imbalance where price will now look to as a strong demand for price engineering if needed.
See the charts here -
Understanding the Fundamentals behind the Supply, Demand & Future Supply through of cause and effect.
Oil prices and levels of are often seen as being connected in a cause-and-effect relationship. Simply put with oil current at $66.00 per barrel, as oil prices move up, inflation—which is the measure of general price trends throughout the economy—follows in the same direction resulting in a higher overall price.
Keep in mind, as the price of oil falls, inflationary pressures start to ease.
Producer Price Index
This is a measurement of the in prices of said commodity , where the change in prices of the products sold is measured by the producer. The exclusion of Tax, trade margins and transport cost which are all variables a buyer of a physical will have to burden.
The PPI is a average movement of price, which are subsequently tracked by the economic indicators dealing with the price fluctuations end users have to pay at the end of the supply line.
Below is the vs Oil - providing some crucial cause and effect over the future supply of Oil and where price is overall moving towards, again use inefficiency in the market.
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strong bear and bull cases with a lot's of thinking in the process you didn't make a quant analysis but you still did a qualitative one taking in account all of the catalyst behind those zone of supply and demand.
strong analysis well done !