Wednesday, August 31, 2016

USD Time?

The USD is smack in the middle of its long standing range at 96.24. The big question is whether it will get into the upper half of that range and start to challenge some of the previous highs and signal longer term strength.
3 yr chart
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At this point the sideways structure IS on the mature side at 17 months. Sideways moves have only exceeded this once, 2012 to 2014, which lasted 23 months. 

Additionally it is possible to identify a double abc structure potentially completed.

 3 yr chart
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In the first series of abc above, the c =.78 of a. in the next abc series the c = .62 of b and b =.62 of a

6 mo chart
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And as you can see below once again USD is challenging the .62 retrace point of the previous leg, in this case the c from the second series.

At the moment then there are a number of resistance  points clustered just overhead; the median of the range at 96.24, the .618 retrace at 96.28, and the overlap of beginning of the last subwave down at 96.50.
Taking out 96.50 will confirm the beginning of a new structure up , potentially of a higher degree that challenges the top of the range seen over the last 2 years.

Why do we care? Crude of course.

Monday, August 22, 2016

Hedge Funds vs. the Hedgers

When it comes to excitement WTI pretty much wins. Between geopolitics, currency sensitivity, refinery economics, seasonality, and consumer behavior you're talkin never a dull minute.

Recent spec short covering by hedge funds, ignited by freeze talk and USD weakness is finally meeting producer hedging with Q 17 hitting 53 Friday. John Kemp at Reuters reports,
" Hedge funds had established a record short position of 220 million barrels in NYMEX WTI by Aug. 9, but this was followed by a record one-week 54 million barrel reduction in short positions by Aug. 16."

 So right now it's the Hedge Funds vs. the Hedgers and it s not at all clear who s going to be triumphant (Que Olympic theme)
Bulls want to see 48.55 taken out, the 50 % retrace and overlap of a previous low.

Bears want to see 46.46 penetrated.

USD Update

Critical to so much else in the market the good ole USD is looking particularly stable and directionless longer term, slightly weaker medium and shorter term.

The above 5 year chart reveals only 6 months spent in a trend, unless sideways can be considered a trend.

More recently the USD can be described as nearing the bottom of it's range, with support yet to be proven certainly.
I can find Fibonacci relationships between the swings within the range, but frankly, all that is subject to revision in a structure like this, until it is pretty definatively complete.

6 Mo

click to enlarge
The move up over the last 2 days will have to break 95 for starters, with 96.50 looking a lot more convincing.

Very short term it has to hold 94.42

Monday, August 15, 2016

Crude Rally Stall?

The Crude had a pretty good pop last week, up 10%. Is there more to come?

 1 mo. Sept
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WTI is definitely tagging some Fib retrace levels as well as having a corrective (upside) abc look.
 c = a at 45.30
6 mo. Sept

click to enlarge

 6 mo. Nearby

 6 mo. Nearby
Over all the upside move COULD be an abc structured B of larger degree within an ABC down.
 If so it should reverse here and the highs will be in.
I have been thinking something along this way for a while, so I have a bias, and the structure itself is not an easy trade.
Last half Aug good beach weather.

Tuesday, August 9, 2016

WTI Levitates

Big push above the earliest resistance of Fibinacci .38 yesterday, all the way to the 50%.
Thank You to Mohammed bin Saleh al-Sada and the shorts.  As a mostly Elliott Wave guy I have to go with the price info;

 click to enlarge

 A 50% retrace is usually where you would look for a sub wave to run out of steam, however, the chart action on the downside SO FAR has a choppy and corrective look, followed by another thrust up, with impulse like characteristics.

Next serious target is the .618 retrace AND it really should not be exceeded if this move lower from 52.73 still has more to run. If it doesn't have more to run and WTI starts to challenge that 52.73 high, the next targets above that WILL be the 59 area as a long term Fib .38 retrace; 

 click to enlarge

Thursday, August 4, 2016

Crude Oil Bounce

As WTI took out the psychological and technically important $40 level, stops must have been triggered. My comment via Twitter,
And now those levels are within reach. At this stage the move down from $52 is likely still intact and the bounce is just that, with further lows in store, before a more serious corrective rally can be mounted.
The Fibonacci .382 retrace level is rather modest and could be expected prior to a resumption of the existing trend.

  click to enlarge

Note there is NO positive divergence on the RSI in the above chart.

Additionally seasonal and fundamental headwinds continue, with the USD relatively steady near it's highs.    
3 year chart
Notice that huge move up from May 2014 to Mar2105 for the USD roughly coincides with the period of greatest destruction in Crude prices.
 Any USD action that starts to look technically bullish will be a significant drag on Crude's ability to sustain a rally.

On the flip side, a retest of the lows of the USD range down around 92 will be supportive. 

Risk remains of a retest of the May lows as WTI carves out a diagonal 5th wave .  It is August and 
frankly if a diagonal 5th DOES show up it could well be a a grinding choppy move lower that steals from everybody.

Tuesday, August 2, 2016

Follow me on Twitter...

Many comments get posted up there that never make it to this blog until a day later if at all.

True sometimes for good reason, nevertheless.

From Twitter yesterday