VOT Research Desk
Market Analytics and Considerations
Fundamental and Technical Rundown
- International tensions are currently declining.
- Brent crude is limited by the recovering dollar.
- Possible breaking of the rising wedge indicating further price declines?
Following a consolidative and within day on Wednesday, West Texas Intermediate (WTI) is currently trading around flat so far today. A missile that killed two people when it fell close to a Polish village, according to NATO, was not a targeted attack.
For the second day in a row on yesterday traders reduced their open interest holdings, this time by roughly 26.8K contracts, taking into account advanced findings from CME Group for crude oil futures markets. Volume decreased by more than 246K contracts and left behind two consecutive daily builds in the same direction.
WTI appears to be being sustained at $85.00.
The fall in open interest and volume that coincided with yesterday’s negative price movement in crude oil signals that a future decline is not likely in the very near future. In opposition to that, the WTI could enter a consolidation period, and so far, a strong support has shown around at the $84.00 per barrel level.
The fundamental background of Brent crude oil
This morning, the price of Brent crude oil is essentially unchanged as the rumors of Russian missiles hitting Poland are swiftly fading. Should NATO countries have reacted, the consequences of such measures would have seriously damaged the supply-side. The Polish government had previously said that it will stop importing Russian oil by the end of 2022, but Transneft has indicated that Russian supply to Poland may be in the future.
Brent crude only reacted marginally, mostly because of a higher U.S. dollar, notwithstanding yesterday’s decline in crude stocks as reported by the EIA weekly storage report. The economic calendar (see below) for later today includes speakers from the Fed as well as information on construction permits.
Due to a recent reduction in inflation and delayed potential interest rate hikes, the value of the dollar has been correctively declining. Due to these factors, the Dollar Index (DXY) may be bottoming out as less aggressive central bank projections, notably in Europe and the UK, are a result of underlying challenges. This could calm the declining USD.
VOT Economic Activity Schedule
Technical Perspective
The lower boundary of the rising wedge chart formation (black) is being tested by the daily Brent oil price movement. If the daily candle ends underneath this area of support, further decline could occur approaching the crucial 90.00 level. Despite this, the Relative Strength Index (RSI) is still hovering around the midpoint of the 50-point band, favoring neither providing increased nor gloomy impetus at this time, which is indicative of the fundamental environment. Because of this, I predict that relatively brief price volatility will be limited and that Brent crude will remain in the 90 to 95 region.
Daily Simple Moving Averages
|
Name |
MA5 |
MA10 |
MA20 |
MA50 |
MA100 |
MA200 |
|
Crude Oil WTI |
86.48 |
87.80 |
87.55 |
86.12 |
90.03 |
98.60 |
Candlestick Formation
Bearish reversal signal
Low Reliability
The Harami Bearish Design is a two-candlestick pattern made up of an earlier, relatively long white real body and a comparatively little black real body.
The Japanese word for pregnancy is “harami.” The small candlestick is “the baby,” while the tall white candlestick is “the mother.”
It indicates that the present uptrend is weakening.
It’s ideal if the second candlestick’s shadows are contained within the first candle, but it’s not required.
The following candlestick should corroborate the Harami indication.
The first two candlesticks of the Three Inside patterns are also the Harami pattern.
It is not a reversal formation as significant as the Hanging Man or the Engulfing.
