Brent/WTI spreadLooks like we just might be widening a bit further on the Brent/WTI spread. If not, today is the day to bet on it narrowing.
UKOIL-USOIL
UKOIL Bearish Flag and Pessimistic OPEC Expectations (June 5th)UPDATE: Closed at 61.50
EDIT -- ZOOM OUT TO SEE FLAG, take no notice of the Harmonic Pattern
This is a clear bearish flag, no doubt about it. Been rebounding in the channel since the start of Jan2015.
A break of the lower part of the channel could signal a further fall continuation to previous Supports/Resistances of
54.58, 52.17 and more severely, the Jan low of 45.56. We've also got Feb 2009 Supports of 39.
Psycological levels of course 60, 55 (based off of confluence see rectangle Feb 2015), 50, 40 and so on.
Stops @ 66.10
Reason for this is that I'm not aiming for "a trade" where my Risk/Reward would usually be 1:1
More of a long term target with a short-term stop
On the Fundamental Side this is relating to USOil Price Action, but the underlying idea is the same
Seeing that after the November 27th meeting, when OPEC decided not to cut production, Oil ended up plummeting ~$30.
A couple of weeks ago, the OPEC Head, or the Iranian/Saudi Oil Minister, i can’t remember which one, said that it is highly unlikely that we’ll ever see oil at $100 again.
With that in mind, seeing that Oil is now flirting around the $60 handle, any decision to cut production on June 5th, could send Oil a great deal higher, maybe ~$20-$30.
Therefore, that being the case, it seems extremely plausible that OPEC do end up sticking to the status quo. In which case, hello $40 again.
Fully welcome any ideas to prove me wrong/different viewpoints.
#Oil Sits On Historical Support; Model Sees Lower Levels $USOilFriends,
Lots of talk at the moment regarding the uncoupling of geo-political events that would have pushed price of oil further up, in contrast to the current sustained decline in price seen in both US domestic and Brent crude oils. Over-production, increased reserves, or political manipulation ... There is a taste for everyone seeking an explanation.
OIL SITS ON A MULTI-MONTH TECHNICAL SUPPORT
From the technical side of things, it appears that both $UKOil and $USOil have attained a significant price level, as they both sit on a multi-month structural support, highlighted for your visual delight in their respective charts.
PREDICTIVE/FORECASTING MODEL SEES LOWER LEVELS:
While this should cause a knee jerk reflex in the market, causing price to react by a reactive rally, the predictive/forecasting model continues to see lower levels as for as high probability targets, namely:
$USOil sees the following targets:
1 - TG-1 = 82.68 - 10 OCT 2014
and
2 - TG-Lo = 79.65 - 10 OCT 2014
while $UKOil sees the following targets:
1 - TG-1 = 83.04 - 10 OCT 2014
and
2 - TG-Lo = 79.08 - 10 OCT 2014.
CAUTIOUS OUTLOOK:
Two words of caution are worth mentioning here:
1 - A reaction to the upside is widely anticipated at this point, and while this is a probable scenario at the current structural level, I would anticipate a limited upside - Quite possibly, a reactive upsurge would help define an Elliott Wave's 4th wave, especially in $UKOil where there appears to be a 3rd wave extension screaming for a relief rally.
2 - The targets defined are of two types: One is a numerical target ("TG-1") which defines a level from which price is expected to rally in a range paced at significant Fibonacci levels, between 0.382 and 0.618. In contrast, the nominal target ("TG-Lo") defines a level from which price is expected to either retrace at a level greater than 0.618, of simply reverse, such that price would surpass the prior structural level of the preceding swing.
Feel free to post commentaries, be it fundamental or technical. These charts have been crunched so that I would be able to illustrate their span and the significant structural levels reached today. However, these are also daily timeframes, therefore, I would expect a significant amount of time to go by before any significant technical event occur. Hence, feel free to request updates on this chart (or other ones as a matter of fact).
Also, here are links to prior predictive analyses and forecasting that worked out quite well with UKOil - So far, these have lend themselves well to the predictive/forecasting model (links also available in the "Related Ideas" below):
In this UKOil, price was forecast to hit Point-5 of the Wolfe Waves before reversing to the bearish target,. It did both quite well:
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In this second UKOil chart, price was forecast to turn towards its lower target. A structural high had been carved out at about 117, which helped define a stop-loss. Following a protracted sideways course and a near-challenge of that 117-level, price fell and hit the forecast target:
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Again, this is all playing out on DAILY timeframe, so there is plenty of time to turn to other things.
Thank you.
David Alcindor
Predictive Analysis & Forecasting
Denver, Colorado - USA
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Twitter: @4xForecaster
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