West Texas Intermediate crude oil had been super-trending on the daily chart for three weeks in July before a major correction and now looks a bit top-heavy since it was not able to hold above its nine-period SMA Monday (7/30). Low trading volume, also known as the “summer doldrums,” may hamper a rally. Monday (7/30), crude recorded its lowest trading volume since May 25.
WTI was displaying a bottoming formation the last week of June on the weekly chart, then rallied, but may struggle moving higher with its strong resistance overhead. The trend is down on the weekly chart and I am now waiting for a fresh sell signal. WTI sits atop support on the monthly chart and the trend is up, but forgoing a rally, the trend will most likely change to the downside. Closing below this support level and a change to the downside will set up tall technical hurdles for the crude to jump over.
Heating oil’s charts looks somewhere in between the crude and the RBOB. Similar to the crude, heating oil was super-trending for much of July before a major pullback and now sits atop its nine-period SMA. On the weekly chart, heating oil bottomed out at the end of June and is now wedged between support and resistance. A price move either way may be telling for its longer-term direction. On the monthly chart, heating oil looks as if it’s struggling to move higher. It has been moving sideways since April 2011 and the trend may be about to change to the downside.
For Your Consideration
Keep in mind that the European central bank’s Governing Council is scheduled to meet today in Frankfurt. This meeting may give strong support to the euro currency, thus weakening the U.S. dollar.
In my opinion, regardless of the decision, they’re building a dam out of sand; meaning, if there is a big move in the short term, the euro may continue its overall downtrend with the U.S. dollar rallying in the long term. The euro may see the 118 level and possibly see prices as low as 112.
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Futures, options and forex trading is speculative in nature and involves substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed.