Crude Oil Analysis: Brent Remains in Bear Phase Despite Recent Uptrend
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Various fundamental factors, including the worldwide economic downturn and predictions of worse to come, will certainly exercise a downward pull on the price of Brent crude oil during the next few weeks.
On the other hand, in the Northern Hemisphere, winter is setting in and China’s economy is still growing strongly, which will tend to stimulate demand for oil and push the price upwards.
If we look at the candlestick chart below, which covers the price of Brent crude oil since June 2011, we can clearly see a downtrend emerging over the longer term.
There were several mini up and downswings, each lasting about three weeks, but the trend lines clearly show falling tops and bottoms.
Since the beginning of October 2011, however, there seems to have been a reversal in this longer-term trend. We are seeing rising tops and rising bottoms, which could indicate that the bear market is over.
If we adhere strictly to the Ichimoku Kinko Hyo crude oil analysis, however, we are still in the grips of a bear phase.
The price is below the Ichimoku cloud, the current price is way below that of 26 periods ago and both the red Tenkan Sen and blue Kijun Sen are below the Ichimoku cloud.
A short trade is not advisable right now, since the price is approaching the recent low of $106.09 it reached on 1st November. Any close below that, however, could see the start of new lows.
Spread betting account holders looking for a long position will have to wait for a close above the Ichimoku cloud. Once we reach that level, the price might well be heading to a new high above the level of $116.41 we saw on 8th November.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 21 November 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
The contents of this report are for information purposes only. It is not intended as a recommendation to trade. Neither InterTrader nor CleanFinancial.com accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
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'Crude Oil Analysis: Brent Remains in Bear Phase Despite Recent Uptrend' edited by DB, updated 22-Nov-11
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