CL Analysis | Week of February 27th, 2017

Thank you for reading this week’s CL Analysis.

Choppy, Narrow, Sluggish…you pick the adjective and the CL market has been all of that…and then some.  Check out the range the daily chart has been in for 84 days.

Range - Daily Chart

There are several key reasons for this narrow range.  But, essentially, you can break the reasoning down into 2 categories:

1.)  The cut in production from the OPEC nations has begun to be felt in the amount of supply available to the market.  Thus raising prices.

2.)  The increase in prices for oil enticed the U.S. shale producers back into the market.  On Friday the Baker Hughes announced that rigs drilling in the U.S. rose by 5.  Compared to the same period last year, there are 202 more rigs in production.  Additionally, the U.S. crude production of 9 million bpd last week was the highest level since April 2016.  Thus pushing price lower.

The real question as to whether or not prices will stay range bound will be if the OPEC nations can tolerate a clear increase in U.S. production.  OPEC will meet again in May, where they will discuss whether to extend production cuts further.  In the meantime, we can expect to see more choppy, narrow trading ranges.

CL Analysis – The Charts

Crude continues to consolidate in a wider retracement pattern.  The 78.6% Fib retracement has held price in check since December 2016.

Daily 78.6%

The theme continues on this daily chart.   This symmetrical triangle formation is also considered a “coiling” formation and is the proverbial calm before the storm (breakout).  We will be continuing to watch this pattern develop as to whether the break will be a continuation pattern or a reversal pattern.

symmetrical triangle

One thing that is certain on most trading weeks, regardless if it is chop or trend, is the direction of CL is set early in the week.  The high or low of the week is made on a Monday or Tuesday.  This week was a holiday week, but nonetheless, the high for the week was made on Tuesday (see chart below).  The reason this is an important consideration is because you can get a “predictive” gauge on which direction the market is “leaning” and adjust your trading accordingly.

CL Analysis

Summary – CL Analysis

The bottom line here is that this market will continue to drift in a sideways pattern until either the decrease in supply from the OPEC cuts drives price higher or the increase in U.S. production is offset by higher demand.  Until then…look for more of the same.

Above the Market

54.50 – 55.00

55.50 – 55.80

56.15 – 56.45

Below the Market

53.35 – 53.00

52.40 – 52.10

51.45 – 51.15

To receive a full oil trading plan every day for CL (Light Sweet Crude), where we will apply our trades based upon the OTG CL technical outlook, please Click-Here and sign up for a Free Trial with The Oil trading Group. You will also be able to join us in our live trading room during this free trial to experience how we put these trade plans into practice in the markets. Have a great trading day, from the Oil trading group. We hope you find our Weekly Oil Technical Analysis helpful.

Disclaimer:

The Oil Trading Group. (“OTG”) does not hold itself out as a Commodity Trading Advisor (“CTA”).Given this representation all information and material provided by OTG is for educational purposes only and should not be considered specific investment advice.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.  (Go to www.OilTradingGroup.com for the full disclaimer).

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Our lead trader Jason Love has been an active day trader for the past 10 years. The Oil Trading Group was founded over 5 years ago to address the glaring need for quality day trading education. Prior to becoming a day trader, Jason ran a 300 seat call center, as the Vice President of Operations. As a veteran of the United States Navy, who served during Operation Desert Storm, Jason understands the value that structure and discipline have in day trading the volatile financial markets. In addition to providing day trading education to customers, he is also providing education services to a large futures trading firm, based in Chicago. When Jason is not trading, he is coaching his son’s Travel Select Youth baseball team and spending quality time with his family.

Jason

Our lead trader Jason Love has been an active day trader for the past 10 years. The Oil Trading Group was founded over 5 years ago to address the glaring need for quality day trading education. Prior to becoming a day trader, Jason ran a 300 seat call center, as the Vice President of Operations. As a veteran of the United States Navy, who served during Operation Desert Storm, Jason understands the value that structure and discipline have in day trading the volatile financial markets. In addition to providing day trading education to customers, he is also providing education services to a large futures trading firm, based in Chicago. When Jason is not trading, he is coaching his son’s Travel Select Youth baseball team and spending quality time with his family.

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