Oil Trading Alert: Up and Down. Who Will Take Control?

By: Przemyslaw Radomski & Nadia Simmons | Wed, Aug 13, 2014
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Oil Trading Alert originally published on Aug 13, 2014, 8:19 AM


 

Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective.

On Tuesday, crude oil lost 0.68% as the bearish report from the International Energy Agency and waning concerns over Iraq supply disruptions weighed on the price. As a result, light crude re-tested the strength of the support zone and approached the recent lows. Will we see a breakthrough in the next few days?

The International Energy Agency cut its 2014 global oil demand growth forecast by 180,000 barrels per day to 1.0 million due to lower-than-expected deliveries in the second quarter and the International Monetary Fund's weaker outlook for economic growth. The IEA said in its monthly oil-market report that the oil market looks better supplied than expected (despite armed conflict in Libya, Iraq and Ukraine), which had a negative impact on the price.

Additionally, Iraq's oil output still hasn't been affected as the insurgency hasn't reached the southern part of the country, where main oilfields and export facilities are located. As a result, the commodity extended losses and dropped below $98 once again. Will we see further deterioration in the near future? (charts courtesy of http://stockcharts.com).


Larger Image

The situation in the long- and medium-term remains unchanged as crude oil is still trading in a narrow range. Therefore, what we wrote yesterday is still up-to-date:

The price currently rests at the long-term support. The combination of the rising support line based on 2 major tops and the 200-week moving average is something that should make you alert - it certainly makes us alert. The combination of these two support levels is strong enough to stop the current decline, but on the other hand, if it is broken, we will likely see a quite significant slide. Consequently, we keep monitoring this area with extra attention.

Can we infer something more from the very short-term perspective? Let's examine the daily chart and find out.


Larger Image

On the above chart, we see that crude oil still remains between the recent lows and the resistance zone created by the May and Jul 15 lows, which makes the very short-term situation unclear. However, when we take a closer look at the chart, we can see a potential reverse head and shoulders formation. If this is the case, and the commodity is building a right shoulder at the moment, we may see a short-term trend reversal in the near future. Please note that this scenario is currently reinforced by the medium-term outlook that we discussed above and the current position of the indicators (the CCI and Stochastic Oscillator generated buy signals). Nevertheless, as long as there is no breakout above the neck line (based on the Aug 4 and Aug 11 highs), another sizable move is not likely to be seen.

Summing up, the overall situation hasn't changed much as crude oil is still trading in a narrow range slightly above the rising, long-term support line and the 200-week moving average. Although we noticed a potential reverse head and shoulders formation, it's too early to open long position as there is no breakout above the neck line and the nearest resistance zone still holds. Therefore, we think that it's worth to stay on the sidelines waiting for another profitable buying or selling opportunity.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bullish

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment.

Thank you.

 


 

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts

Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons's reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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