Lots happening out there in the world of crude oil. First, we have the conflicting expectations regarding a production freeze at Sunday’s meeting among key global oil producers in Doha, Qatar.
Hopes on a positive outcome (i.e. output cuts) have driven WTI through my prior mentioned $42 breakout point this week. The weekly chart shows us a bullish breakout from the downtrend, a break through the 200 day (40 week) MA and through the recent neckline of the consolidation pattern. Adding to those positives are increasing moneyflow momentum (top pane) and cumulative moneyflow (bottom pane). Shorter termed momentum studies stochastics and RSI are overbought. Longer termed momentum study MACD looks good.
Despite the positive technical developments for WTI crude, if there was ever a time to wait a little bit longer for a confirmation of the breakout, this is it. I think it’s a mugs game to buy oil until after Sunday’s meeting. However, we will have clear direction on how to play crude after Sunday. If cutbacks are on the table—look to buy oil so long as $42 + prices can hold. Technical resistance targets are $45, $60, and the high $70’s. Yes, oil may spike hard after a positive meeting. But that’s the price of a cautious trading strategy on oil.
If no agreements are likely to come out of the meeting, we should expect to see a flat or bearish follow-through for crude – that is, until the next meeting (there have been a couple of prior meetings affecting prices over the past few months). Our strategy would be to avoid, or (for aggressive speculators) consider shorting back to the low/mid $30’s.
At this point, it’s a mugs game to guess Sunday’s outcome. Your guess is as good as mine.
Keith on BNN Television Monday April 18th at 1:00pm
I am on BNN next Monday April 18th. I’ll be on air for the 1:00pm show. If you email before Monday’s show, you can submit your questions for me to answer on the show via a form at the bottom of this link. Be sure you specify the question is for me.
If you wish to phone in with questions during the live taping my show (1pm – 2pm) , you can CALL TOLL-FREE 1-855-326-6266.