lunes, 16 de febrero de 2015
Keep your eye on these crude levels
February 16, 2015 • Reprints
Crude oil has generated a long lateral process between 2011 and 2014, showing ups and downs between $110-114 and a minimum of $75.
With the break of $75 broad crude in November 2014, bearish movement expanded and West Texas Intermediate replicated the same prior lateralization size.
While it is too early to speculate on a final bottom of $40, it is important to note that the market recognized the support at $40, thereby replicating the same size prior lateralization. That means $40 is now level key medium-term support for oil.
In this sense, it's feasible to consider a continuation in volatility for oil in coming weeks. As long as the support at $40 is not broken, we can still speculate on a further recovery towards $55 at first instance and $58 later, considering $62-65 is the major resistance zone in the medium term for WTI.
Only with a break below $40 will crude remain vulnerable to extend losses pointing towards lower levels recorded in 2008 at $33.00-32.50 dollars.
While in the past two weeks the prices of WTI have stabilized, from the psychological point of view we see the market is full of bears who have saturated and cornered the market.
The current recovery is partly the result of the activation of stops on short positions and some genuine buying opportunity, and it is premature to suggest a definite bottom at $40. In the coming weeks we will continue to see volatility and to monitor $40 as key support to enable thoughts that the current rise may be part of a greater recovery to higher areas as projected. We will have to see.