We are approaching territory where the market is overly-bearish on Crude, says David Linton, Chief Executive at Updata. After all, “What new bad news is out there that we don’t already know about?”
Linton thinks it’s too difficult to call the bottom, but he does believe that seasonality will come into play soon, possibly in the next few weeks, and we will see some bullishness kicking into the price like we see in most Q1s, making Q1 2016 a strong period for oil prices. After this period of recovery, Linton thinks it will then make new lows later in the year.
Point-and-figure targets on the 60 minute chart indicate downside targets of 28, 27.35 and a new downside target of 22.15, but smaller upside targets are forming and Linton says this could suggest a low is close. WTI is also similar, with downside targets around 26.75 to 28.45, but smaller upside targets also forming.
Walter Zimmermann, Senior Technical Analyst at United-ICAP, agrees with the idea that crude is due a correction before resuming its downtrend, albeit from an Elliott Wave perspective. He thinks Brent Crude is due a Wave IV correction which could take it back up to 33.00 before the Wave V lower begins. See Chart.
For details, watch Updata’s Technical Analysis for Energy Traders, which includes an analysis of the major energy, currency and stock markets:
Crude Oil US
European Gas & Power
Coal & Emissions