Alpari - Analytics


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Crude Oil, CL1 NYMEX

As I have mentioned in my prior analysis, earlier this month, if we compare the oil relative to Real Money (Gold), we would understand that the oil price is relatively is too cheap to sell right now. Whatever the market suppliers decide to do next will be in direction of boosting the oil price. I‘ve heard that they’re considering to decrease their production in equal amount to help raise the oil price.

On the daily chart of the Crude oil, price was moving down in regards of these two channels. The bigger channel (1) starting from May 2015 and the smaller one (2) forming inside the channel (1) since Oct 2015. It is obvious that the price did respect the both channels borders.

Another Important thing is the MACD behavior in regards of the channels. On channel (1) you can see that there is a clear divergence between two major lows in Aug 2015 and Feb 2016, suggesting that the price is most likely to reverse in regards of channel (1). If you look closely at the channel (2) another divergence between two recent lows is clear. This also could be confirmed with RSI. As you see on the chart whenever price made a new low, RSI did the same, except the two recent lows on the channel (2).

In regards of confirmation, we would want to see a breakout at the upper line of the channel (2) and a close above it. I would consider the exit out of the market when price reaches the upper line of the channel (1).

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