Crude Oil at critical juncture – might make a bearish reversal

28 nov 2017

For more details and background please read my article on Long Term Analysis of Oil published recently at talkmarkets.com/content/etfs/crude-oil-remains-a-slippery-customer-the-likely-future-direction?post=155533&uid=8599

OPEC meeting is schedule on Thursday the 30th November 2017. It is widely anticipated that OPEC members and other cooperating oil producing nations will agree an extension of the production cut beyond March 2018. It remains to be seen if they will and in what form. Any disappointment could be a big catalyst in which the saying “buy the rumour and sell the news” might hold true.

Please see the accompanying charts and comments in the update section below.

Conclusion: If the reversal of price is confirmed, then it could offer several ways of taking bearish position either directly OR Oil related Stocks and ETFs.

Warning: This is my interpretation of price action using TA approach that I consider helps me most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.

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Thank you for taking the time to read and view my analysis.

DanV

28 nov 2017

Nota

Crude WTI has retraced 38.2% of the decline from 2011 high to 2016 low coinciding with bearishly aligned 200 period weekly SMA & EMA at a level where we have other confluence of Fibs extensions and projections shown on the chart.

In addition, COT data shows large speculators who are trend followers are often wrong at major turning points. Their net long positions are at historical extreme along with historically Open Interest. This suggest that if there was a weakening in price, there will be many who might look for exit resulting in potential reversal

Further, Crude WTI and UK Brent are very highly correlated instruments an move in tandem. However, at major pivots they often divergence by one making new high or low and other failing to confirm that such as we did back in 2016 low. Similar divergence is being noted now with UK Brent failing to confirm new high posted by WTI as shown in the chart along with other details described in the recording

14 gen 2018

Nota

The anticipated follow through to the initial decline did not develop and we have new higher high for the cycle. So in the short term the wave counts did not hold. However don't let that distract you.

Oil is still completing the retracement. Once this is done, the price decline to $55 area is anticipated.

We have Net long by Large Speculators is at historic extreme, evem higher than July 2014 and stands at 657,590 with open interest also at historic high (as at close of business day on 9th January 2018). This could get even more extreme but is likely on borrowed time. I will republish this chart as soon as price is little clearer. In the mean time here is the chart with COT data -

If you wish need to understand how COT data can assist your analysis here is a link to short video -

25 mag 2018

Nota

Oil continued to form a new high so I was little too early. However, the overall view is hot changed and here is a comment I gave to a question in my Tradingview chat. It updates the details showing why we could expect a reversal
tradingview.com/chat/m/f2b891377281406f8aae312de593b13b/

25 mag 2018

Nota

s3.amazonaws.com/tradingview/snapshots/y/YRp4de1B.png