Crude News
Three weeks of sideways trading and an inside move this past week suggests investor indecision and impending volatility.
While events surrounding COVID-19 are primarily controlling the price action, last week traders were introduced to other variables such as the strength of the U.S. dollar, which weighed on foreign demand…
And a battle between small speculators and goliath hedge funds in the stock market, which could force the latter to liquidate their long crude positions.
Traders seemed to shrug off the EIA data, which represents the past, while looking at the future. Furthermore, crude inventories dropped sharply, but gasoline stockpiles rose.
Demand in Europe and Asia is especially being monitored as contagious variants of the coronavirus drive a rise in COVID-19 infections…
While a slower rollout of vaccines in Europe and travel curbs in China are expected to limit fuel consumption.
We could see some short-term weakness, but bullish traders seem to be convinced that the OPEC+ production cuts are likely to continue to provide longer-term support.
A short-term correction would probably be welcomed by those who missed the rally, which began in early November.
Bullish Scenario: A sustained move over $53.94 will signal the presence of strong buyers. If this move creates enough upside momentum, then look for the rally to possibly extend into the next main top at $57.41 over the near-term.
Bearish Scenario: A continued sustained move under $53.94 will indicate the presence of sellers, but taking out $51.44 is likely to trigger an acceleration to the downside. If this move creates enough downside momentum, then look for the possible start of a short-term correction into $46.05 to $44.47. An alternative bearish signal for this week would be constituted by a trade through $53.94, followed by a lower close for the week. This will form a potentially bearish technical pattern called a closing price reversal top.
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