But OPEC Said We Had a Deal

In our last analysis of the Oil, which we published more than two weeks ago, we marked the possibility of a larger movement, which was contributed to the potential breakout from the sideways trend (pink). It is usually hard to predict in which direction the price will move but for a trader it is not a problem as he can trade both ways using pending orders and just wait for a breakout.

Breakout finally happened and it was bearish. Movement largely influenced by the data about inventories, which showed a huge build. Later, this movement was additionally driven by the typical price action, where broken supports and stop loss orders there were increasing the bearish momentum. After some time, the price stopped and created a trend continuation pattern – a pennant (blue lines). Pennant resulted with another bearish breakout which leads us to the situation seen now.

What is also important is the fact that the price of Oil goes down even despite the weaker dollar. Usually the stronger USD is contributed to the falling price of Oil, Gold and other commodities. Currently we are having a very weak USD (recently in the mid-term) and low price of the Oil. Probably, the price would be even lower if the Greenback was a bit stronger.

Is it expected that the price will come back to 55$/bbl? Not so much, now it is time for the OPEC members and another try of verbal interventions but market should be already immune to that.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis