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Market Analysis

Home » Oil » Crude Oil Analysis by Option Banque

Crude Oil Analysis by Option Banque

Posted by Option_Banque in Oil - June 24th, 2015 7:20 am GMT


Crude futures (July 2015) on Tuesday made an intra‐day high of US$61.36/bbl and made an intraday low of US$59.53/bbl and settled up by 1.545% at US$61.11/bbl on session close, noted the Option Banque’s technical analysis team.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 59.61 which is an immediate resistance and breakage below will call to 58.90-56.05-55.15. MACD is above zero line but histograms are in decreasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving positive crossover for confirmation of bullish stance; while the RSI is approaching oversold region and rebound can be expected trend.

U.S. oil is expected to drop to support at 59.18 per barrel, as it failed to break resistance at $60.59. A wave pattern suggests that the surge from 56.51 could have been driven by a wave b, the sixth wave of double-zigzag that developed from the May 6 high of 62.58. A small double-top could have formed around $60.59, indicating a slide to 57.77, the 23.6 percent level. A break above 60.59 will open the way towards 61.85. This target will be aborted, should oil rise above 60.70, a resistance provided by the upper channel line, as such a rise will violate the channel. U.S. oil looks neutral in a range of 59-61.46 per barrel, and an escape will point a direction. The bias could be towards the upside, as the correction from the May 6 high of 62.58 has been shaped into a triangle, which looks like a continuation pattern. A break below 59 could cause a loss to 57.48, the 100 percent level. U.S. oil faces a resistance around 61 per barrel, and may retrace to 59.81 before seeking its next direction.

Trading Strategy: Neutral

Based on the charts and explanations above, sell below 61.20-61.80, stop loss at 61.70 targeting 59.80-58.05 and 57.00-55.70. Buy above 58.00-56.80 with risk below 56.50 and targeting 58.70 and 59.80-61.05; downside breakage of 56.50 will lead to 56.00-55.00 and 54.40-53.10.

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