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Oil Makes an Attempt at Breaking the Wall

By:
Colin First
Updated: Oct 20, 2016, 08:56 UTC

Oil made its first attempt at breaking the brick wall between $52 and $53 yesterday on the back of some very weak oil inventory data that was released

Oil Makes an Attempt at Breaking the Wall

Oil made its first attempt at breaking the brick wall between $52 and $53 yesterday on the back of some very weak oil inventory data that was released yesterday during the US session. The expected value was 2.2M barrels but the actual value turned out to be -5.2M barrels which was a shocker for the market. This caused a major pop in the oil price as it immediately ran up through $52 and went as far as $52.2 before the sellers came in a rush and sold the commodity and made the price to back down below $52 and it sits as $51.7 as we write this. We believe that we will see many more such attempts at breaking the resistance between $52 and $53 and we also believe that this will eventual be broken in the short term and then the path will be free to move towards $55 and then on to $60 in the medium term. For today, expect some more consolidation under $52 which may also be the case for the next few days as well.

Oil Hourly
Oil Hourly

Gold also finally broke through its range top at 1263 and it sits at 1269 as of this writing on broad USD weakness across the markets. We had been forecasting a move towards 1300 in the short term and with the break of 1263, we believe that there will be a slow and steady move towards 1300 and we will have to wait and see the price action there to see if this upmove will continue beyond 1300 or whether there will be a correction towards 1250 back again.

Silver had been following the gold price diligently for the past few weeks but it seems to have been caught in a rut yesterday as it could not break through the resistance at 17.8 while gold did manage to break through its range top. There have been repeated attempts at breaking 17.8 but these have been successfully repelled so far by the bears and we believe that the consolidation below 17.8 will continue today as well as there does not seem to be any major impetus in the markets for the commodities to make any drastic price moves. The price sits near the 200 DMA which has been acting as the support of late and until this holds, the bulls will continue to be hopeful of an upmove.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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