Crude Oil, Daily
Dallas Fed moderate-hawk Kaplan sees oil supply balanced with demand by mid-2017 and thinks there could be under supply by 2018-2019, though he is of course talking the book of the oil weathy region of Texas. Wall street Journal reports today that banks are worried about the growing pile of debt taken on by European oil companies making little or no profits, and that means money to finance new drilling and other projects is drying up. Several oil companies said they expect their ability to tap credit lines to be diminished after loan reviews.
While the Fed officials and banks view the markets from a longer term perspective we focus on near term opportunities that are created by market fluctuations. Three days ago the price of WTI crude fell below the rising regression channel it had been in since the mid-February this year. This happened after oil hit the upper Bollinger Bands in the weekly chart and created a bearish pin bar (a shooting star). This is a sign that institutions have been taking money off the table and suggests that we might see a correction in the price of crude. Crude oil is now oversold as per Stochastics (7, 3, 3) and near 23.6% Fibonacci level but could but could be a sell should it first rally higher from here.
I am therefore looking for sell signals between $40.17 and $40.80 with Target 1 at $34.47 – $38.85 area and Target 2 at $34.00 – $35.90. Please, remember to apply the entry and risk management principles I’m teaching in the webinars. Join me to free webinars if you want to learn more.
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Chief Market Analyst
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