Sunday, June 5, 2016
WTIC West Texas Intermediate Crude Oil Weekly Chart and COT (Commitments of Traders) CL Oil Chart
Oil maintains its rally and buoyancy in recent weeks but logs a negative week last week. The red lines show a rising wedge pattern (bearish), overbot stochastics and negative divergence with the indicators sans the MACD. The initial spank down started last week due to the neggie d, however, the MACD line wants price to come back up one more time for a matching or higher high after the initial pull back. Since a pull back occurred last week, price may come up for the higher high early this week and at that time the MACD has to be monitored. Oil will not roll over until the MACD rolls over with negative divergence (as price moves higher). Oil may favor the 38-52 sideways range for the remainder of the year.
The COT chart displays the bottoms in oil prices with the green circles and tops with red circles. On an overall relative basis, the red bars are very low on the chart and the blue bars very high indicating that price is likely topping currently. Price will likely have to retreat into the green bubbles in the right margin which would correspond to lower oil prices.
The projection would be for a pullback in prices for a week or two, then price will come back up again to current levels, at that time, if the MACD turns neggie d and joins the other indicators, the top is in for oil on the weekly basis and more down is ahead. With the Fed rate decision on tap on 6/15/16, markets may play coy and wait for the reaction in the US dollar that will send commodities in the opposite direction.
Oil appears to be topping and will either continue lower from here for a week or two, followed by a recovery for a week or two, then likely roll over for extended down, or, recover now and play around at the 50-52 area as the MACD flattens and rolls over which will then roll oil price over to the downside. Keystone has no position in oil currently and is not interested until the MACD goes neggie d since that would make the short side an attractive trade. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
NOTE: COT charts are courtesy of COT Price Charts an excellent resource and annotated by Keystone.