I've seen a lot of people looking at oil's long-term trendline for a speculative buy opportunity this past couple of weeks. While oil prices should remain relatively low as markets work to establish a demand-supply equilibrium in 2015, I agree with the hypothesis of at least a technical bounce once WTI and Brent prices test their trendlines (around $47 for WTI and $53/54 for Brent). To complement all those excellent charts shared by others on this site, I'd simply like to point out the long-term support on the Oil/Gold ratio. It seems like WTI will test it's trend-line when this ratio hits its 1993/1998/2009 lows.
Turns out that the WTI/Gold support worked really well!
FrancisHunt
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Yes I have been on a Long WTI vs Short XAU for a bit.
How can we get an update on this price relative chart?
Good mini thread!
FrancisHunt
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Good chart, nice share not enough valuation relatives done .. keep it up
AkshayChinchalkar
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I have been looking at the same trendline. However, my reservations include the fact that this same trendline when looked at on the semi-log chart has already been broken at around $63. From a fibo standpoint, I'd say final support before a drop to your arithmetic trendline is 52.75, which is 2.618 times the initial drop in this leg lower (just before the plunge).
ABRAK75
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That's very true about the trendline being broken on a semi log chart. Nevertheless, the Oil/Gold ratio support remains the same.
AkshayChinchalkar
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Am with you on that one Adrian. Am not sure if the EUR has as strong a correlation as it used to with Oil, but if the EUR still remains a proxy for risk on in the credit markets, a 9 year old trendline coinciding with the 200 month simple moving average on the EUR monthlies suggests oil may be close to some sort of a bottom.