After the spectacular rally since September crude bulls are
taking a brake recently. The main reasons of the rally were partially old news
about the extension of OPEC and Non-OPEC production cut beyond March 2018. The
geopolitical tension on the Middle East added further support to the bulls and
the spread between the Brent and WTI widened to over 7$. Another strong support
that helped the market rally were news about dropping inventories. However some
analysts started to question this drop, especially the one reported from the
Middle East.
Now with elevated speculative positioning where net longs
are close to records seems that traders lost confidence a little. We have ahead
this weekly oil reports and Monthly oil report from IEA and later the month
from EIA which will be closely watched. However be aware of the fact that
geopolitical tension could fuel a rally far beyond the levels that fundamentals
would justify.
Technically WTI seems to have completed the 5th wave (or
could be close to the end) and the 38.2% of Fibonacci level seems to be a good
reason for a correction. I expect the prices to retrace somewhat toward the
$52.50 support and then we will see if prices rally one more time ahead of a
deeper correction.
Good Luck and remember to watch your risk and be consistent
Mr. Tech Man
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current economic and capital market environment. It is not an investment advice
and should not be viewed that way at all, and the creators of this material
cannot be held liable for any potential losses resulting from trading, where
despite this disclaimer someone would consider this material as an investment
advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom
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