Sunday, July 15, 2018

Oil COT (Commitments of Traders) and WTIC Oil Weekly Charts; Overbot; Negative Divergence; Upper Band Violation

The red circles show oil tops and green circles are bottoms. The COT bars may squeeze back inwards going forward which would be in concert with a pullback in price. The orange line show the higher highs in price but the indicators are all negatively diverged (red lines). The neggie d wants to see a spankdown which occurs starting late last week creating the red candlestick on the right-hand side.

The upper standard deviation band was violated so price should tag the middle band at 67.31, and rising, going forward. That upward-sloping orange channel is in play with price retreating off the top rail perhaps headed to the lower trend line again at 65-67-ish.

That big up move in oil three and four weeks ago was due to tighter supply worries. The US will impose more sanctions against Iran prohibiting their production to come to market. Libya production went off line as well. OPEC threatened to turn the spigots on faster, but no one believes that den of thieves, and they increased production less than originally touted boosting prices.

Libya came back on line on Friday sinking prices. Iran can bring oil to market through back doors. There is lots of drama in the oil markets right now. US consumers are not happy seeing higher gasoline prices at the pumps which typically starves-off consumer spending. Sentiment becomes soggy as gasoline prices climb.

The monthly WTIC chart hints that prices will likely chop sideways at these elevated prices into the end of the year; say the 65-78 range. The 200-month MA is 66.41; as long as this support holds, oil has lots of upside ahead in the months and years ahead. If 66.41 fails, oil may go into free fall and collapse. This would be in concert with a deflationary scare and recession. Keystone does not hold any position in oil currently but may buy SCO (2x inverse oil) tomorrow and on weakness going forward. 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: The COT chart is from our friends at COT Price Charts and annotated by Keystone.

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