US OIL - October continues to surpriseHello Traders and Analysts,
Breakdown:
1. Note
2. Contents
3. Research breakdown
4. Education recap
5. Information on Lupa.
A Note before reading - this is a forecast analysis - based upon our trading strategy. This is tagged Long, due to purchasing further increments upon imbalances.
Please do not take this as face value and conduct the relevant investment strategy to successfully trade the probabilities.
Master Key for zones
Red = Three Month
Blue = Monthly
Purple = weekly
Scarlet - Four day
Orange = Daily
Green = 8 Hour, 16hour
Grey = 4hour
Pink = 1 hour
Updated Idea: April 30th 2021
Understanding where we are now with the imbalances.
Price has tested on the weekly the $67.00 high, which was a critical double top move allowing a correction to take place bringing price back towards $61.50. This established a weekly imbalance where April 19th 2021, the previous bearish wick offered a pricing pivot point.
The Sellers had "netted" where the lowest point of the candle matched the fractal, allowing the market to create structural imbalance to add long positions.
The engineered lows lured sellers and buyers to add aggressively. .
The imbalances have netted off on the weekly to the monthly candle of February, March 2021.
Now refer to the Monthly - price of the wicks low, closed at the monthly close two months previous - resting on top - meaning, the bullish movements are still in clear progression.
Buy Zone was between 61.8 - 66.8 $
Daily Chart - buying from the retrace.
Price had made a great opportunity here for a buying opportunity whereby price will test the new established Daily imbalance.
The price has shown now a breakout of the downward corrective channel.
This is played out perfectly - where a A,B,C,D pattern has been created
see here
Fibonacci & Daily Imbalance Combination
Above the weekly imbalance block, price had surpassed and created the buying impulses, price needed to fill the wick as at 8th March 2021, and build upon the high probability of extending higher highs. Based upon the Fibonacci pattern, price established its peak "0" and once forming a -0.27 extension high, a correctional retest of the imbalance was required. This aligns with the Daily and weekly imbalance blocks.
Volume Analysis
The battle around the reactive zone is strong as the hidden battle under a monthly imbalance is a weekly imbalance, where movements create opportunities for price filling of monthly wicks. Price needed to revert from the monthly zone above $68--> to recapture correctional moves and stimulate the buying structure in place.
Where confirmations were measure above, buyers were still in control. The range of buying and selling upon a weekly bullish candle cancelled out allows range traders and short term speculators to join in the liquidity.
Note how the top of the volume range - bulls and bears back off, leaving the buyers to take over.
USD CAD vs WTI
Inverse correlation, but interesting relationship overall, as the Loonie weakens, the opportunity cost for buying from imbalances from the monthly offers the Dollar to gain traction towards the next zone.
Price also offers the WTI as the Canadian Dollar weakens, pressure of the commodity to rise.
The relationship between looks to the output of barrels.
Use the link below to look at the US table and CAD table.
US
www.tradingview.com
CAD
www.tradingview.com
Fundamental Fans:
Understanding the context behind Oil with the "disastrous" negative price of the Oil futures crash.
2020-2021.
We have seen a nice impulse into the channel and a rejection upon reaching the trendline at $53.00
Good question, based on the fact - from a technical standpoint - the sell off back in February, March 2020 - reversed on a fractal point within the market structure to the crisis of Oil supply being heavy weighted in comparison to the demand . The spike to zero was the abundance of supply which effectively the storage supply became over saturated and "worthless", the May contracts were not accepted for physical delivery and the paying for the delivery took place to prevent further storage.
This imbalance was created in which created the impulse. Price re-established itself with $30-36 zone for a further imbalance where price will now look to as a strong demand for price engineering if needed.
Here is the current cross examination of the UK Oil Vs WTI using the weekly chart.
Both are approaching a critical point in the respective price zones which both happen to be monthly imbalance zones. The correlations are gearing to a highly reactive point, so watch with caution.
Understanding the Fundamentals behind the Supply, Demand & Future Supply through inflation of cause and effect.
Oil prices and levels of inflation are often seen as being connected in a cause-and-effect relationship. Simply put with oil current at $66.00 per barrel, as oil prices move up, inflation—which is the measure of general price trends throughout the economy—follows in the same direction resulting in a higher overall price.
Keep in mind, as the price of oil falls, inflationary pressures start to ease.
Producer Price Index
This is a measurement of the rate of change in prices of said commodity , where the change in prices of the products sold is measured by the producer. The exclusion of Tax, trade margins and transport cost which are all variables a buyer of a physical will have to burden.
The PPI is a average movement of price, which are subsequently tracked by the economic indicators dealing with the price fluctuations end users have to pay at the end of the supply line.
Adding the inflation ETF into the mix, the commodity price is rising inline with both the UK oil and WTI - so again the rate of positive correlation here is showing highly probable further increments to long positions.
See below for the weekly chart.
Opec Commentary:
A gradual increase in oil output which has bolstered price, however to add to this the implications of inflationary pressures that consuming nations fear will derail an economic recovery from the pandemic.
Supplies from the US and India and China for extra supplies after oil prices surged more than 50% this year
Opec news source
Where the output has now been boosted by "400,000bpd a month until at least April 2022 to phase out 5.8 million bpd of existing production cuts - already much reduced from the huge curbs that were in place during the worst of the pandemic" Reuters.com 4th october 2021. Output policy unchanged sources say.
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