Before I left for holidays I had two open trades, USOil (Buy) and UK100 (Sell). The USOil trade hit Target 2 ($44.55) from my entry at $39.79 and continued all the way to north of $48.50 before turning south again. The UK100 trade was closed on the rally to 6880 from my entry at 6720 in the middle of July.
Today I have re-entered the USOil trade ($46.25) this time on the short side as the psychological $47.00 level and 61.8 fib level were both breached and broken on yesterdays close. Target 1 at $44.55 is above the 38.2 Fib level and a little over the 2 week ATR. However, it is but below the 50.0 Fib level, 20 and 50 DMA which all currently coalesce around $45.50, so expect some resistance here before the move lower. Target 2 at $42.25 and sub $40.00 again, cannot be ruled out.
Alternatively, the $45.50 areal could provide support for a move back to the August high of $48.88 and another attempt to break the psychological $50.00. OPEC sees demand for oil increasing during Q3 and Q4 of 2016 and that higher prices will prevail. The International Energy Forum (IEF) meets September 26-28 in Algeria with OPEC member countries due to meet informally during the event.
Today the crude markets have ignored remarks from the Iraqi PM that he supports proposals by OPEC for a production freeze, which is set to be discussed at next month’s meeting. Most energy analysts have been downplaying prospects for a production freeze due to Iran’s ongoing build up of supply following the lifting of sanctions (production still remains well off pre-sanction levels), which has been irksome to Saudi Arabia.
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About Janne Muta, HotForex’s Chief Market Analyst
Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.
Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.
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