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Mixed view on the oil market In our previous article, we said that we would like to abstain from setting any price outlook for USOIL after it stopped 0.10$ above our 70$ price target. Unfortunately, that continues to be the case also today, and we do not wish to set any new price targets. However, we would like to update at least some thoughts on the asset. On 8th December 2022, we floated the idea of the price deviating too far from its moving averages. Interestingly, the next day the price halted its decline and started going up. Since then, the price has broken above 20-day SMA. As a result, USOIL currently trades near the 78.90$ price tag. At the moment, we will pay close attention to the price action. If the price breaks above 80$ and holds there, it will bolster the bullish case for USOIL in the short term. In such a scenario, it could be possible that USOIL will attempt to fully retrace toward its 50-day SMA. That would mark a significant downtrend correction and perhaps even foreshadow a bigger move up. However, our current thoughts about the oil market are mixed. There are several factors responsible for that. First, economic activity is slowing down rapidly, weighing on oil demand in the coming months. Second, National Oceanic and Atmospheric Administration reported that the Earth experienced the coolest November since 2014, which can contrarily boost demand over the winter. Third, the U.S. might consider slowing down or halting releases of Strategic Petroleum Reserves (SPR) as their levels are reaching 1983 lows. In addition to that, there are rumors of Germany and Poland demanding oil from the Russian company Transneft, which opens a debate about whether some of the Russian crude oil can be allowed back into the European market. With that said, we would like to wait longer on the sidelines until we see a clearer picture of the market. Illustration 1.01 Illustration 1.01 displays the daily chart of USOIL and simple support/resistance levels. If the price holds above the short-term support, it will be bullish in the short term. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
TVC:USOIL
by Tradersweekly
17
BRENT CRUDE OIL BULISH PATTERNDemand for crude oil is expected to rise after a cold wave hit USA, which will likely increase the demand for oil distillates, easing of the COVID measures in China and US crude oil inventories coming up less than the analysts have had expected. British crude oil benchmark, BRENT, had broken the resistance of the triangle pattern, a strong bullish predictor, and the price might reach levels of 87.5 in the next couple of days. In an event of reversal of the trend, the price might reach levels of its previous low of 75.35 RSI and MACD both are confirming the bullish outlook, with MACD histogram above 0 and rising and RSI rising as well and approaching the 50 neutral line. Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
BLACKBULL:BRENTLong
by legacyFXofficial
USOIl Crude Oil important Support LevelWTI Crude Oil is at a key support level now and i don`t think we have seen the last of it. OPEC+ unexpectedly decided to cut output in October by 100,000 barrels a day. It`s not much for now, but they will continue cutting the supply until they will get the oil to $90. I`m looking for a bounce to the $85 - $92 area before heading to $62 by the end of next year, when i expect the beginning of an electric revolution worldwide. Looking forward to read your opinion about it.
TVC:USOILLong
by TopgOptions
2
70$ nearly hit, reconsideration of thoughts, and retracementFor several months, we provided price rankings for USOIL, most of which were fulfilled already. The only price target we kept was 70$ per barrel, which was nearly hit last Friday when the price stopped at 70.10$ (just 0.13% away from the price target). With the price level nearly hit, it is time for us to step away from the market and reconsider the situation. In our previous idea, we outlined how the price deviated too far from its moving averages (20-day SMA and 50-day SMA) and might be setting itself for the price retracement to the upside. After hitting a new low, that became the case for USOIL, with the price rising to 74.30$. At the moment, we do not expect a primary trend reversal from bearish to bullish. However, we want to stay on the sidelines and avoid setting new price targets until the picture gets clearer. Until then, we will maintain a neutral position. Illustration 1.01 Illustration 1.01 shows the daily chart of USOIL. Yellow arrows indicate a new low at 70.10$ and retracement toward 20-day SMA in progress. Technical analysis Daily time frame = Bearish (but showing signs of exhaustion) Weekly time frame = Bearish Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
TVC:USOIL
by Tradersweekly
7
Crude trader - closer to a mean reversion rally Having reached the double top target, we see that Crude is now 15% below from its 50 day MA - in the past 2 years we've been as stretched as 17% below this average before we saw solid mean reversion kick in - we are in oversold territory and that offers an elevated risk of short covering By way of flow, we now see 67% of open positions in crude are now held long by clients, so they see upside - the selling pressure seems to be supported and the buyers are having more of a say. Is price putting in a ST low? It seems to be the case - while we're yet to see momentum truly shift, it feels like the prospect of a squeeze higher has risen
PEPPERSTONE:SPOTCRUDELong
by Pepperstone
A traders’ week ahead playbook – the last hoorah of 2022Having turned neutral on risk last week, on the idea that traders would look to square exposures ahead of this week's data deluge, the call was early but largely on the money – where we saw the US500 close lower 4/5 days, losing 3.4% on the week. Elsewhere, the USD gained a modest 0.4%, US 2-year Treasury yields gained 7bp and crude hit downside targets with an 11% loss. This week, markets could go anywhere…we react with stealth, and we simply must be in front of the screens to do so. The US CPI print sets the tone above all else – on an in-line (with consensus) print the market will do what the market wants to do, but it’s the outlier outcomes/extreme on the distribution of expectations, where we could see lasting moves in price that are easier to trade. Core CPI surprises with a 5-handle for example – unlikely, but it would cause the NAS100 and risk FX to go for it into year-end. Conversely, a hotter CPI – say 6.4% (and above) and a hawkish set of dots from the Fed and statement from Powell could see funds call it a day for 2022 – risk bleeds into 2023 and funds buy back USD shorts. Going into the data we see the aggregation of flow - The set-up in US500 looks ominous but with OPEX this week again it's hard to make a call – we trade price and if it breaks lower there’s a trade there – EURUSD finds supply into 1.0600, so look for a 1.0600 to 1.0400 range – although the options breakeven implied move on the week suggests 1.0700 to 1.0350 with a 68.2% level of confidence. AUDUSD looks poised for a move higher, with 0.6850 a big level to watch, but if the CPI print is hot then the AUD will underperform in G10 FX. GBPUSD trades a wedge into horizontal resistance, so the bulls need a firm close through 1.2300 to negate that, while a downside close below 1.2130 would accelerate the falls. XAUUSD has been well traded by clients, but I think $1760 is the level to watch this week and think it gets there. It’s a huge week – know what’s on the calendar. Size your trades and know your risk – 2023 is in our sights. What’s on the radar this week? US Triple witching – a market event to consider, where we get the expiry of SPY ETF, S&P500 index and futures options expiry – some $2.5t of notional expire, so this could have big implications for the equity market as options dealers manage their exposures accordingly. US CPI (Wed 00:30 AEDT / Tue 13:30 GMT) – One could argue that the US CPI print is the big volatility event of the week given the market is desperate to see inflation falling towards target – Subsequently, the market won’t take too kindly to any print that doesn’t show inflation heading lower and subsequently has them questioning a strong consensus view for 2023. The economist's consensus is for headline CPI to fall to 7.3% YoY (from 7.7%) and core to drop to 6.1% (from 6.3%). So, should we see US core CPI above 6.3% then the USD should rally hard, and equity should find decent sellers. Conversely, a read below 6% would be a surprise and the USD bears should find comfort in that. Where do the risks reside? It's hard to make a clear playbook on price if the numbers come in line with expectations, but I expect big moves in rates, the USD, and equity if we see an outlier print and moves that could potentially trend into year-end. Do consider the CPI ‘fixings’ market is pricing headline CPI at 7.2% YoY. The Cleveland Fed CPI nowcast CPI model – which has found form in prior CPI reads - suggests upside risk vs consensus expectations, with the model running at 7.5% YoY for headline and 6.3% core respectively – an outcome that could lift rates pricing and the USD. FOMC meeting (Thurs 06:00 AEDT / 19:00 GMT) and chair Jay Powell press conference (06:30 AEDT) – It would be a big surprise if we didn’t see the Fed step down to a 50bp hike – the economic projections should show 2023 core PCE inflation revised down to 2.9% (from 3.1%), with a 20bp cut to the 2023 GDP forecast to 1%. One focal point and where the algo’s could react is whether the fed funds projection (or ‘dot’) for 2023 is lifted from 4.6% to 4.9% or 5.1% - The market is pricing the fed funds terminal rate around 5%, so we are talking semantics here – but a lift to 5.1% is my own base case and could be a quasi-statement of intent – but could we see the median estimate even higher? We also want to understand if Jay Powell opens the door to a slowdown to a 25bp hiking pace from February - again, while in line with market pricing, this could be taken that we’re closer to the end of the hiking cycle and is a modest USD negative. Looking ahead, with the rates market pricing 133bp of cuts through Dec 2023 to Dec 2024, one suspects there are modestly hawkish risks when trading the FOMC meeting and therefore upside risks to the USD - especially with Jay Powell’s press conference like to continue beating the drum that the risks of overtightening are a lesser evil than under-tightening. Retail sales (Fri 00:30 AEDT /13:30 GMT) – clearly overshadowed by the prior day’s events, it’s worth pointing out that the market eyes a fall of 0.2% MoM, with the retail ‘control’ group element, eyed at -0.1%. With the market seeing low growth/possible recession as one of the core themes to run with for 2023, this consumer data could get greater attention than usual. Fed speakers – we get San Francisco Fed president Mary Daly speaking on 17 Dec (04:00 AEDT / 17:00 GMT) – Daly is the first to speak after Powell’s testimony - she may clear up any unwanted market reaction. Europe ECB meeting (Friday 00:15 AEDT / 13:15 GMT) – the market prices 53bp of hikes, so we shouldn’t see too great a reaction when the ECB hike the deposit rate by 50bp to 2%. To many at the ECB, the current policy setting is already in the vicinity of neutral, so it's easier to justify a step down to 50bp as we head into restrictive. Still, with inflation estimates likely to be revised up this is not the time to be letting financial conditions ease too intently. We see markets pricing a terminal rate of 2.8% by mid-2023, so the market expects another 80-odd basis points of tightening through next year. Also, Quantitative Tightening (QT) is a big factor here, with the market expecting increased colour AND A loose commitment on the start date and the pace at which the bank reduces its bond holdings – potentially one where we’ll get real context in Q123. Watch the 10YR Italian BTP - German bund yield spread as a key driver of EURUSD – at 1.90%, if this widens above 2% then EURUSD should fall. UK Nov CPI (Wed 18:00 AEDT / 07:00 GMT) – the market eyes headline UK CPI at 10.9% (from 11.1%) and core unchanged at 6.5% - naturally the GBP will be driven on a sizeable miss/beat, where this could influence UK terminal rates pricing, with the market currently pricing the UK bank rate at 4.55% by June 2023. BoE meeting (Thurs 23:00 AEDT / Wed 12:00 GMT) – The BoE is expected to hike by 50bp to 3.5%, although there is a 20% chance of a 75bp hike. There will be some focus on the level of dissent against a 50bp hike within the bank, and how the statement marries to the terminal pricing of 4.55% - with rates traders expecting a further 100bp of hikes through the first half of 2023. There seems no clear one-sided risk for GBP from the meeting, but the set-up in GBPUSD is interesting, with clear resistance into 1.2300 and a rising wedge – GBPCAD longs continue to be the momentum/trend play. Australia RBA gov Lowe speaks (Wed 09:30 AEDT / Tue 22:30 GMT) – Dr Lowe is likely to guide to maximum flexibility, being non-committal on future policy direction. There is a lot of water to flow under the bridge ahead of the 2 February RBA meeting, where I expect a 25bp hike, and aside from changes in broad financial conditions, actions from the Fed and the Chinese govt – which could influence - we have 2 Aussie jobs reports and the Q4 CPI print (25 Jan). Hard to see this speech moving the AUD too intently, although we see AUDUSD 1-week implied vol at elevated levels, so traders are expecting movement in this pair this week. Aussie employment data (Thurs 11:30 AEDT / Wed 23:30 GMT) – the market expects 17k net jobs to have been created, with the U/E rate expected to remain at 3.4% - the participation rate will play a role there, with the consensus expecting this to come in at 66.6%. While we assess if the RBA has another hike left in the tank on 2 Feb, I'm not expecting the jobs report to be a huge vol event. China Aside from further re-opening news flow, we get Nov credit data (no set time - new yuan loans are eyed at CNY1.4t). We also get industrial production (consensus 3.7%), retail sales (-3.9%) and fixed asset investment (5.6%). Not expecting the Chinese data flow to move markets too intently, as we are looking at the future and life where citizens have increased freedoms and economics respond as such. Long HK50 / short NAS100 (or US500) continues to work well as a long/short strategy. Switzerland SNB policy rate (Thur 19:30 AEDT / 08:30 GMT) – The market expects a 50bp hike to 1% - a lot to like about the CHF in 2023 and while Swiss rates have been rising, if global growth is going to be a major concern for 2023, then the CHF typically outperforms in this environment. USDCHF is breaking down, but we see divergence between the price and the RSI. Tactically I feel there are modest upside risks to the USD this week but the set-up in USDCHF does look heavy. EURCHF is one for the radar, with the 4-hr chart starting to break down – I like this lower for 0.9780.
PEPPERSTONE:US500
by Pepperstone