WTI - This Might Get Nasty
The oil market is extremely exciting. The price is currently approaching a long-term support zone between USD 66 and 68. Will the price hold there? In my view, this is questionable.
I am taking a bearish stance on WTI for several reasons:
First of all, the global economy is sluggish, which is causing demand for oil to fall. As things stand at present, the world's largest economy, the USA, is also heading for a recession. At the same time, renewable energies are on the rise, which in turn is dampening demand for oil.
From a technical perspective, the volume profile is cause for concern: if we look at the profile between the low from 2020 and the high from 2022, we can see that the price of WTI has only now entered the value area.
The POC is around USD 40.50 and therefore significantly below the support zone. The low of the value area is even just over USD 31.
Unfortunately, I cannot show the volume profile in this chart due to a lack of data; instead, I have derived it from the CL chart (WTI futures). If the downward trend continues, WTI could start its first braking attempts at around 55 dollars.
I am not saying that WTI is necessarily bearish. Still less am I calling for merciless shorting of the market. However, I would like to point out that a very sharp fall in prices is possible if WTI breaks through the aforementioned support zone between USD 66 and 68.
I am taking a bearish stance on WTI for several reasons:
First of all, the global economy is sluggish, which is causing demand for oil to fall. As things stand at present, the world's largest economy, the USA, is also heading for a recession. At the same time, renewable energies are on the rise, which in turn is dampening demand for oil.
From a technical perspective, the volume profile is cause for concern: if we look at the profile between the low from 2020 and the high from 2022, we can see that the price of WTI has only now entered the value area.
The POC is around USD 40.50 and therefore significantly below the support zone. The low of the value area is even just over USD 31.
Unfortunately, I cannot show the volume profile in this chart due to a lack of data; instead, I have derived it from the CL chart (WTI futures). If the downward trend continues, WTI could start its first braking attempts at around 55 dollars.
I am not saying that WTI is necessarily bearish. Still less am I calling for merciless shorting of the market. However, I would like to point out that a very sharp fall in prices is possible if WTI breaks through the aforementioned support zone between USD 66 and 68.
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