Today’s market action followed Jan. 29’s Crude Oil Market Analysis when it forecast that “fundamentally, the market risk remains on the upside,” but that “technically, the market looks very weak.”
The market opened Sunday higher and reached an overnight high of $55.95 but could not break $56.00 and steadily fell during the course of the day to close $1.41 lower at $54.01.
The bearish news includes (1) that the Saudi Ambassador to the U.S. called the current oil price “adequate” for both oil-producing countries and oil-consuming countries, and (2) that the National Weather Service forecast that the temperature will gradually rise from below-normal in early February to normal and above-normal from mid-February to March.
As COMA stated on Jan. 23, in the short term the market “has little direction.” Thus any news can cause the market to swing one way, only to be undone the other way by different news later on, as the market has shown since COMA made the forecast on Jan. 23.
Fundamentally, the market is still buoyed by the cold weather in the short term, so the market risk remains slightly on the upside.
Technically, the market needs to hold above $53.00-$53.35 to gather the momentum to have another shot at above $56.00 to test the $57.00-$57.40 resistance.
Strategy: Buy at $53.35 with a stop at $51.85, take profit above $57.50. Sell at $57.20 with a stop at $58.20, take profit below $51.00.
Dr. Chen
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7 comments:
Very good analysis. I have enjoyed reading your insight on the oil market.
Thank you, Chris.
Your encouraging words make me feel that it is worth the efforts to continue to write my blog.
Dr. Chen
I feel a change in the wind
Thanks for providing these insights, they help me understand and learn more about the energy market.
Main stream media and many other bloggers just regurgitate information they skim of each other, whereas your commentary is both fresh and insightful.
Yes, I enjoy your blog immensely, it is a constant learning experience with well though out commentary that cuts to the core of the issue at hand
I enjoy your analysis quite a bit and I was wondering after todays action with such a huge move on above normal volume if anything has changed in your strategies on crude? Regarding new support and resistance? I guess todays move was unexpected but then again that is what to expect when trading crude, that is what I am learning so far. Thanks in advance for any insight.
Thank you all for your praising words. I toil tremendously when writing my blog, and it seems that the toils are worthwhile.
As to specific questions. I will address them in today's analysis.
Dr. Chen
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