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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