What I’m Watching Today: Oil Weekend Gap Risk, Bitcoin Above 50-Day EMA, USD/SEK Downtrend, Natgas Bounce

Light Sweet Crude Oil

The first chart that I’m bringing up is the light sweet crude oil market, and I don’t necessarily want to trade this, but I do feel like this needs to be brought up. There is still the possibility that there are airstrikes or something to that effect in Iran over the weekend. With Monday being Martin Luther King Day, that means shortened futures trading.

With all of that, I do think it’s a very dangerous place to be right now in the crude oil market. We did sell off when Donald Trump walked back some of the rhetoric, but since then, we have seen a little bit of a bounce. I think right now, what you are looking at is a lot of position squaring.

As things stand right now, if there is no situation with Iran, then I actually favor fading this market. You are starting to see that a little bit on the hourly chart, as we may try to drop from here. But heading into what is, for the most part, a 3-day weekend, you really don’t want to be exposed to oil, in my honest opinion.

Bitcoin

Another market that I’m watching very closely is Bitcoin because it is starting to show signs of life again. The day so far on Friday has been a little bit negative, and it’s worth noting that Thursday was as well, but we shot straight up in the air on Monday, Tuesday, and Wednesday.

I look at this as a market that is at a point of inflection. We have broken above a significant barrier in the form of $95,000, and I do think the longer we stay above $95,000, the more likely it is we grind higher. Anything above the 50-day EMA looks pretty good to me, which is all the way down at $92,161.

I do recognize that the 200-day EMA is at $99,500, and it will probably be a little bit of a technical barrier, but I still have Bitcoin going to $107,000. It’s just not going to be overnight. But it does look like a market that is breaking out of a massive consolidation and accumulation area.

Swedish Krona

The next thing I’m watching is the Swedish Krona. This is a currency that, despite the fact that it’s in the US Dollar Index, a lot of traders don’t pay attention to it. But right now, it is the 2nd best performing G10 currency at the moment, with the exception of the Australian dollar being stronger than it.

The primary driver is the Swedish Central Bank’s hawkish hold. In other words, they are holding at 1.75%, and while that’s not considered to be a huge amount of interest, it is a different look than many other central banks. They are still out there assuming that the US central bank, the Federal Reserve, will cut rates, and that has driven the dollar down to 9.23 Krona.

I do think that this is a pair that could drop down to the 9 handle, an area that’s been important multiple times in the past, so I don’t think it shocks anybody, especially if there’s a little bit more of a dovish pivot by the Federal Reserve. Short-term rallies should end up being selling opportunities. The 50-day EMA is at the 9.3 level, and I think it probably continues to be a bit stubborn. I’m not looking for big moves here. This is not a pair that moves rapidly, but it does tend to grind in one direction for long periods of time.

To further drive the point home, you can see the Swedish Krona trading very strongly against the Euro, its biggest trading partner, as it had recently made a fresh new low. The stagnant Eurozone is having issues with growth, while Sweden continues to post positive growth data early this year, and that fuels a rotation out of Europe and into Sweden.

Natural Gas

Finally, Natural Gas. I think we are in the process of bottoming out at the moment, and there are cold temperatures coming to the US fairly soon. The $3 level in the futures contract seems to be holding. Furthermore, you have to keep in mind that Monday is a shortened day. It is Martin Luther King Jr. Day in the United States, which is why I’m not bringing indices to your attention; they will be closed on Monday. Natural Gas will be closed for a huge portion of the day

But I do think we are looking at a market that has offered enough deep value that people are starting to push back. The $3.50 level is a major barrier; if we can overcome that, we would have very strong momentum, I suspect. But right now, I look at $3 as a short-term floor. So, I’m willing to buy pullbacks in small positions to take advantage of what I think will be a consolidation and then eventually an accumulation phase over the next couple of weeks.