Talking Points
Key cyclical turning point next week
Waiting for sentiment to turn more lopsided
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
The first half of next week looks potentially important for Crude from a time cycle perspective. Several short and longer-term cyclical methods converge around this time which suggests to us that the commodity is vulnerable to a reversal. Given the rather persistent grind higher over the past few weeks we favor some kind of top. A key variable we look for around these windows is an extreme in sentiment. One of our favorite metrics for gauging this is the Daily Sentiment Index or DSI which is a daily survey of short-term futures traders. As of Wednesday’s close, DSI was only around 77% bulls. Before trying to fade such a strong trend we will look for DSI to get closer to 85% bulls and price to at least test resistance near $105.00.
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Crude Chart: May 22, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk Next Week:
LEVELS TO WATCH
Resistance: 104.20 (Fibonacci), 104.90 (Gann)
Support: 102.85 (Gann), 102.05 (Fibonacci
Strategy: Sell (FXCM) USOil early next week.
Entry:Sell USOil on the first daily down close next week
Stop: No more than 1% above entry.
Target: 101.75
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.
Analysis: Looking for Some Sort of Reversal in Crude Next Week
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