Oily update ahead of producers’ meeting

First of all, let us note the producers’ meeting over the weekend is unlikely to change excess supply situation and here is why –

  • Markets would still remain oversupplied by about 2 million barrels per day
  • OPEC and IEA have both revised global oil demand growth forecasts lower
  • Joint OPEC and non-OPEC production cut is unlikely to happen any time soon
  • Furthermore, oil prices have already priced-in output freeze.

Hence, if we have output freeze agreement over the weekend, oil would see a gap up opening and the strength could last till Europe or early US, before “sell the fact” trade takes over – prices begin to fall.

Let us take note of the technical patterns in oil benchmarks.

Brent – Rising Channel on daily chart

brent oil.png

WTI – Double Top on daily chart

WTI oil

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USD/JPY – finding support at hourly 100-MA

USDJPY H1 (04-15-2016 1746).png

USD/JPY is finding support at hourly 100-MA at 108.86 levels.

Point to be noted – Yen is no longer following equity markets, but leading equities. The only way Yen could weaken is on the rise in treasury yields. Otherwise, there is a very little reason for an uptick in USD/JPY pair.

On technical terms, the outlook stays bearish as long as bears are able to defend sideways channel hurdle seen on the daily chart around 110.20.

 

Dow Technical update

Dow.png

Dow’s convincing break abv Apr 1 high of 17,811 yesterday has undoubtedly opened doors for a cut through 18K lvls and rise towards July 2015 high of 18,130 lvls.

However, daily RSI still remains below its previous reached earlier this month, which indicates short-term loss of momentum if not bearish takeover.

This means a drop to 17,800 lvls and violation that shall end up sending index lower to 17,500 lvls.

GBP/JPY -Head and shoulder breakout, but risk of it being fake

I called a bullish move yesterday and it has officially failed now given the pair has breached 154.23, which i had mentioned here  GBPJPY – Good times ahead, eyes 155.83-156.66 as one under which short-term bullish invalidation is seen.

Now we also have head and shoulder breakout on the hourly and that gives us a downside target of atleast 100-pips. Cautions is still advised since head n shoulder is effective when it appears at the top of a bullish trend and not at the bottom.

Hence, this could be a fake move.

GBPJPY H1 (04-14-2016 1937).png