Crude Oil Analysis: Concerns of Recession Temper Gains Despite Brent Seeing Uptick
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On the 8th of April this year, Brent crude oil briefly touched a maximum of $126.88 dollars per barrel.
Although this was just before the start of the summer season in the Northern Hemisphere, at that stage indications were that the price would show further increases in the months to come.
This, however, did not happen. If we look at the longer term crude oil chart below, we can see that Brent started trading downwards in a range from there.
Towards the end of May the spread betting price briefly touched the lower border of the Ichimoku cloud, only to turn around for a mini-upswing that lasted until the middle of June.
This was repeated several times during the next few months: every time the lowest and highest points were a little bit lower than before.
Turning to the shorter term candlestick chart below, we see that the price briefly touched $116.57 on the 8th of September before heading down again. This time it broke through the $100.00 mark and briefly touched $99.10 on the 4th of October.
More recently, we have seen a renewed attempt by the bulls to push up the price. Currently Brent crude is trading at $109.29.
Given widespread predictions of a new recession in the major economies of the world and the ongoing Greek/European debt crisis, there seems to be little reason for a bull run in crude oil right now.
Crude oil analysis would suggest that merely breaking upwards out of the Ichimoku cloud is not enough to warrant a long trade given the range-bound price movements of the past few months. A cautious trader would wait for the price to move well above $116.00 before venturing into a long trade.
Any new low below $99.00 could be the beginning of a new bear run which short traders might want to exploit.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 14 October 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: Concerns of Recession Temper Gains Despite Brent Seeing Uptick' edited by DB, updated 14-Oct-11
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