Oil is all the rage nowadays. Jed Clampett made a fortune finding black gold in them thar hills and he and kin moved to Beverly. Brent oil is over 92 bucks and West Texas crude is closing in on 90, or is it?
The WTIC daily chart says oil is cooked in the daily time frame. It is topping-out. Price prints higher highs but the chart indicators are all sloping down with negative divergence (red lines). There is no more fuel in the tank to take oil price higher on the daily basis. Money flow is neggie d over the last month but notice that it has some momo over the last couple days. Thus, price may play around for a day or two but the top is at hand, on the daily basis. A multi-day drop will begin and it may even last a week or two.
The RSI and stochastics are overbot on the daily chart also agreeable to a pullback. The upper band is violated so a trip back to the middle band, that is also the 20-day MA at 83.14 and rising, is on the table and also the lower band at 76 if things got ugly with oil and the stock market. The orange line is strong price support at 77.
On the WTIC weekly chart, the double-top, or M-top, pattern was ominous as Keystone pointed out at the time. The chart was in neggie d (red lines) so a top call was easy and down she went. The green lines show the grind lower in oil price during the back-half of 2022 and this year. Price keeps printing lower lows but you can see that the chart indicators were all positively diverged. Thus, a bottom call was easy and voila, price begins the rally higher.
Note how price honored the 200-week MA support at 69. It would be a big deal if that broke since it would likely mean depression not recession. So price runs higher to 89 currently in real-time. The weekly chart shows that the histogram, stochastics and money flow are in neggie d (wanting price to drop now) but the RSI and MACD want to see another higher high in price on the weekly basis after any pullback.
The upper band is violated on the weekly chart so the middle band, that is also the 20-wk MA at 77, is on the table. Moving averages, price S/R and the bands are all ringing the 76-77 bell so keep that in mind as the downside target should the markets fall apart.
The ADX on the weekly chart shows that the trend higher into the double-top in 2022 was a strong trend higher (pink box). However, as oil price topped-out, so did the strong trend status and oil began the multi-month slide lower. Price kept trending lower month after month and the ADX was about to hit the high 20's and move above 30 to indicate that the price move lower in oil was a strong trend lower but alas, it did not. The ADX never considered the fall in oil price in 2022 and this year to be a strong trend lower. The ADX is now way down to 19 so the rally higher from June to present is NOT a strong trend higher.
Trading is playing multi-dimensional chess so marrying the weekly and daily charts together you see that the neggie d on the histo, stoch's and money flow on the weekly will conspire with the universal neggie d on the daily to spank price lower in the daily time frame. All you hear right now is bullish oil talk so these folks will receive a slap to the face as oil price falls in the coming days. The trend lower may last a week or two. You will have to follow the daily chart and wait for it to set up with possie d so you can call the bottom in the daily time frame.
After the multi-day drop occurs, perhaps for a week or two, price will come back up for matching and higher highs on the weekly basis due to the long and strong RSI and MACD. Thus, oil price is topping out today or tomorrow, and will fall for a few days perhaps through next week, targeting 84-ish, then it will recover in October for another high at 90-92.
You will have to follow the charts daily to see how the situation progresses. If the US stock market begins dropping, oil price may target 76-77 right away. If the pullback in the daily time frame is mild say to 84 or 86, and a quick recovery again, the peak on the weekly chart may need to occur first in October and then the following multi-week down move will probably target 76-77 but again, let the charts tell you. There is no need to guess.
As oil drops, that tells you that the US dollar will likely be buoyant at 105+. Some analysts are calling for oil above 100 and discussing price targets at 120 even 130. They are smoking too much of that wacky tobaccy. Keystone does not have any oil trades on right now and will likely not play the drop at hand for oil on the daily basis. 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 Added 8:32 AM EST: Ding, ding, ding. WTIC oil hits 90.00 and Brent oil is at 93.25. USD is over 105. China provides stimulus to goose their economy providing the lift in oil today.
Note Added 9/15/23, Friday Morning, at 6:50 AM EST: Brent oil tops 94 yesterday now at 94.07. WTIC oil pops to 90.50 yesterday now at 90.59. Commie China's triple-R cut yesterday provides the goose to oil prices. Typically, a news event, like this, does not impact the forecast forward with charts but it delays the timing by a few days (as long as the news is not outrageous like the start of WW III). Bring up the WTIC daily chart and the money flow momo prints a new higher high, long and strong, also the RSI squeezes out another high. This is an EOD chart so you can also check the impact of today's trading this evening. The same analysis holds but the top in the daily time frame is delayed for a couple-few days. Today's WTIC chart will provide more clues and especially Monday's. They will zero in on when the top will occur in the daily time frame (when the indicators go neggie d again). China saved the day for a few days.
Note Added 9/15/23, Friday Morning, at 8:54 AM EST: Analysts are guaranteeing 100+ oil in the days and weeks ahead. Brent 93.82. WTIC 90.38.
Note Added 9/165/23, Saturday Morning: WTIC pops to 91 ending the week at 90. Brent is at 93.93. Let's take a look. The WTIC daily chart shows the higher high in price intraday and the RSI is neggie d. Ditto the histo, stochastics and money flow but that pesky MACD line is now long and strong. The MACD line wants to see another matching or higher high so that may be on tap for Monday, more chop in the 90-91 range, but the MACD would be expected to roll over with neggie d and, if all the other indicators remain neggie d, you can call the top in oil in the daily time frame. The Fed may be a wrench in the works next week but the WTIC daily chart is set to top out early next week and begin a multi-day downward slide. On the WTIC weekly chart, the RSI and MACD remain long and strong wanting another matching or higher high for price going forward on the weekly basis. Thus, like the analysis above explains, oil price is topped-out now on the daily basis and will fall for several days, perhaps a week or two, but then recover and come right back up to the 90-92 area on the weekly basis. You can assess and forecast with accuracy if oil is going to top out on a multi-week basis as October begins. Simply look for universal neggie d across all indicators on the weekly chart and you can call the top on the weekly basis (probably will happen early October).
Note Added 9/18/23, Monday Morning, at 5:14 AM EST: WTIC oil runs higher to 91.70 and then retreats to 91.01. Brent oil pops to 94.77 and retreats to 94.03.
Note Added 9/19/23, Tuesday Morning, at 2:31 AM EST: The oil orgy continues. WTIC oil jumps above 92 to 92.46. Brent oil tags 95 overnight now at 94.92 a 10-month high. Let's take a look at the daily chart and see when she wants to top out. Remember, all chart indicators have to be neggie d to call the top. On the WTIC daily chart, price prints a doji candlestick and new high with the chart indicators neggie d and overbot except for the long and strong MACD line. This is an EOD chart so today's pop will have to be priced in as well, but the chart will likely stay as is. Thus, the top is likely 2 days away. A jog move is needed (down-up) to provide time for the MACD to go neggie d and join all the other indicators. Oil price pops today but you have to see how the day plays out. Oil makes a new high but the MACD line may go neggie d today which means this would be the top now. Otherwise, if the MACD remains long and strong, price will retreat for one day, but then come up for another matching or higher high the day after and that will provide the couple days for the MACD line to likely roll over and negatively diverge so you can call the top. You got that? Easy-peasy. Oil analysts universally guarantee oil over 100 bucks as they see Brent at 95. The Saudi's and Russia cut oil supplies driving prices higher and analysts believe China's economy will finally get rolling. The supply cuts deplete inventories around the world. If you bring up the USO daily chart, it is same-o as the WTIC crude daily chart. If you want to speculate and short oil, wait for that MACD line to go neggie d. That will tell you the top is in on the daily basis. The weekly chart remains long and strong so we are talking tactical trading for anyone daring to short the oil market. Oil will top out any day and begin a multi-day drop but after the pullback (when the daily chart will then go possie d), oil will rally again and that is when the analysts may see their one hundo dollar oil (in the weeks ahead although it is not a done deal; you have to watch the weekly charts to see where oil wants to top out on the weekly basis probably in about 2 to 4 weeks which is October).
Note Added 9/21/23, Thursday Morning, at 8:34 AM EST: The Fed decision was yesterday. Currencies are moving to and fro impacting oil and other commodities. Oil peaked and is soggy the last couple days. WTIC 89.40 (was above 92). Brent 93.16 (was above 95). Analysts continue guaranteeing $100 oil ahead.
Note Added 9/23/23, Saturday: WTIC oil 90.33. Brent 93.27. Oil continues the topping process and those expecting one hundo oil, which is everyone, may not see it (not in only the near-term but also in the weeks ahead).
Note Added 9/26/23, Tuesday: WTIC 88.97. Brent 92.56. There is less talk about $100 oil over the last couple days.
Note Added 9/26/23, Tuesday: WTIC tags 95 at 95.03 the highest in one year now at 93.85. Brent tags 97.69, threatening 98, now at 96.71. Humorously, the talk of $100 oil increases with each analyst and pundit now guaranteeing one hundo oil saying it is cast in stone. It is a good time to take another look at the charts to see how the tight supply news is priced-in. The Saudi's cut production to boost prices over the last couple weeks and overnight the US says oil stockpiles are low creating the spike higher in prices. Sleepy Joe Biden depleted the strategic oil reserve to reduce oil prices for a short-term political win and now the low US inventories are helping to send oil prices wildly higher.
Note Added 10/3/23, Tuesday Morning, at 5:14 AM EST: WTIC drops to 88.84. Brent oil drops below 90 now at 90.64. Analysts are not talking about one hundo oil anymore.
Note Added 10/4/23, Wednesday Morning, at 9:53 AM EST: WTIC drops to 86.66. Trip 6's. Brent oil 88.54. What happened to the one hundo oil crowd?
Note Added 10/5/23, Thursday Morning, at 6:56 AM EST: WTIC collapses to 83.30. Brent oil drops to 84.83. The neggie d spankdown continues. US demand for gasoline is at 3-decade lows. Demand destruction is occurring as oil producers and analysts discuss potential peak oil. XLE pukes over -5% this week thus far. The neggie d spankdown on the XLE charts continues. XOM collapses -5.2% so far this week with CVX down -3.3% and OXY down -4%. Warren Buffett the senile jackass always liked Occidental and probably still owns a boatload. OXY has crashed more than -12% in the last 15 days. XOP pukes more than -7% this week thus far. Keystone was correct on the drop in oil and everyone else was wrong. What else is new? Don't forget the tip jar; donations go to good causes and charities.
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