Jean-Paul asks in the comments section:
With US-Russia agreement reached today for Syria, simply, should we short the crude? What do you think of oil price in mid term?
The first chart below is the monthly, multi-year look of crude oil. Note the massive (and obvious) triangle breakout to the upside still in play.
There have, indeed, been many calls for this move in crude to be a bull trap before we reverse lower. To my eye, the second chart below of the daily timeframe shows crude has thus far held its breakout, albeit without the immediate upside energy and trend you would like to see in a bonafide, sustained leg higher.
If the bull trap thesis is going to play out, then the August 27th reversal candlestick lower (arrow on second chart) will likely be the key piece of the puzzle signaling the top. I would place a buy-cover stop-loss above the $112 area if you play, or refer to it if you choose to use short-levered crude ETF’s like DTO to SCO.
To answer Jean-Paul’s question, I do not yet see a trade in crude but suspect the coming week will offer a better spot when we see how it reacts to this U.S./Russia news, as well as the FOMC.
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Chess, you correctly note the triangle is pretty obvious, but I think there is another factor weighing against the break. Schabacker says the break out of a triangle usually comes well before the apex, and my experience is when the pattern gets this close to the end it usually peters out, i.e., just meanders around without a firm direction. But, this break does look fairly substantial, so we will see.
Much appreciated Chess. I think the more crude goes up, the more it kills the weak economic recovery…
I found this :
” Global oil supply should rise in coming months thanks to a mixture of seasonal, Members of the Organisation of the Petroleum Exporting Countries (Opec) said the blame for high oil prices was tension over Syria rather than any shortage of supply. Top producer Saudi Arabia has boosted its output to record levels to help meet the shortfall from Libya. But the Saudi oil minister saw no shortage. “For the record, oil market fundamentals are good. The market is well balanced,” Ali al-Naimi told the industry event.
Opec said in a report this week that there was sufficient supply in the market to cover for Libya’s outage, and Opec Secretary General Abdullah al-Badri said at the meeting there is no need for the producer group to pump more. “If we see there is a shortage in the market, we will act,” he told reporters. “We don’t see a shortage.” Opec’s sentiment on supply was shared in a monthly report on Thursday by the International Energy Agency, which represents industrialised consumers.
cyclical and political factors, the IEA said. That was cold comfort for Asian buyers facing the impact of rising oil prices on economic growth… ”
http://www.brecorder.com/fuel-a-energy/193/1231375/