Oil Hit Upper Trend Line

I mentioned in my earlier post that a possible bearish triangle was in formation in oil. Looks like my predictions are confirmed as today price hit upper trend line of the triangle and is reversing to the downside at the time of writing. As you may see from the chart below we have pressure building up for the commodity to go down. Any time it rallies up, it faces resistance earlier than previous time. So, the first point was 49.30, followed by 48.40, then 46.40, later 46.00 and now 45.60. Let me remind you that breakout traders would sell a break of key support that currently is 43.50-43.00 area. 

If breakout materializes we may see the security to go down as low as 37.50 (the low of August 24). I do have a small short position from 43.16 with a stop loss above today’s high. Let’s remember that the longer term trend is still down and a resumption of the direction may start any time now. FOMC rate decision tomorrow can surely be a good trigger for the continuation of the downtrend. Anyway, any bearish candle on the hourly chart at resistance could be a good point for entering a short position. Let’s wait and see what happens to the commodity. 

Oil in Range for the Second Week

As has been said earlier oil was expected to stay in a range for some time. There were obvious signs of a failed rally upwards that ended with the commodity reaching 49 level. It has been two weeks of ranging now. From technical point of view you can see a bearish triangle in development with the support being at 43.50 level and resistance with descending trend line at 46.00-46.50 area. There is a possibility of a false break above current resistance and a rally to 47.00-47.50 area, but in my opinion, price will likely stall at 46.50.

We should also remember that narrowing range is always followed by sharp increase of volatility and breakouts and prolonged moves. That’s precisely what I expect from the commodity. Sometime in the next couple of weeks the security should break through 43.50-43.00 level. A less likely scenario would be the commodity running above 46 level to 49 resistance and then going beyond that to 54-55 resistance. 

Anyway, if we have a rally towards 46.00-46.50 I would wait for some bearish signs (railroad tracks, bearish pin, M pattern and etc.) at the top to go short. At the moment I have no intentions of buying the security. 

Oil Jumping Between Support and Resistance

Oil rally is clearly stalling. 49 level seems to be solid resistance. You can see on the chart below how nicely 200 ema stopped the advance of the commodity twice. Another thing are those bearish pins clearly seen on 8 hour chart. This indicates increasing bearish pressure and a move downwards can materialize any time now. On the other hand, if you look at 4 hour chart you can see that price is supported by 200 sma and ema there.

Support comes at 43.20-43.00 (US oil) area where you can spot a bullish pin. So, we can state that price is trapped between support and resistance and this causes short term range between 49 and 43 levels to continue for some time. Any attempt to come back to 48 is a sell to me. This week should see a narrowing range in the security which would lead to a breakout. I tend to think it will be downwards as longer term trend is still south. 

Intra day support is at 46.50, followed by 47.00. I am waiting for a false break up and then a bearish candle formation to go short. No intentions of buying the commodity at this point. 

eurusd Trapped Between Support and Resistance

The most popular Forex pair eur/usd is currently trapped by intra day support and resistance levels. The pair has been moving down in waves for around two weeks. It is being supported by 200 sma and ema on 4 hour chart (acts as support) and is trapped by 200 sma and ema on hourly chart. This situation won’t last long and price will eventually explode through one of the technical levels up or down. Bearish picture is favored as price rallied to resistance of 1.1230 today and formed a reversal candle (bearish pin) on the hourly chart. 

Price sort of holds above 1.1175 level, which was resistance yesterday and may act as support today. You may remember that price broke the level upwards today after a bullish triangle pattern on 1 hour and 15 minutes formed. However, the breakout occurred during Asian session and these kind of breakouts do not usually last for a long time. If the above mentioned support is broken, next area comes at 1.1100-1.1080. That should hold at least for today, but not sure if it is still there by the end of the week. Euro is also falling against British Pound, so the pressure for eur/usd to go downwards increases dramatically. 

eur/usd at key resistance

Finally eur/usd has come to key resistance level of 1.1500. It wasn’t able to break it for a long time and looks like it may happen any time now. The area actually is between 1.1465 (May 15^th high) – 1.1532 (February 3^rd high). 

As you can see from the daily chart below Euro was accumulated from March 12^th when it made the low of 2015 through the rest of the year with key accumulation levels being 1.0600 and 1.0800 levels. 

It is also clear that the pair broke above both 200 sma and ema. It has actually close above 200 sma and this may happen with 200 ema today too. 

1.1498 level was hit today during Asian session and Euro is playing with it at the time of writing. As all major fundamental news has been released a week or two weeks before; we may assume that a new trend in the pair can start. This time it will probably be upwards. If that happens, buying on dips will be the best strategy for day trading. 

If the breakout does not occur today, the highest probability is that it will happen somewhere around Wednesday this week when US Durable Orders data is released. 

See you with the updates later in the day. 

eur/usd daily chart