Is the Market Direction for Oil Changing?

February 12th, 2015
in contributors

Oil Daily Chart Analyses

by Erik McCurdy, Prometheus Market Insight

Note: The following technical and cycle analyses provide short-term forecasts for the oil market. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

oil-money-380x180

Follow up:

Technical Analysis

Oil closed sharply higher today, moving up toward recent short-term highs above previous lows of the downtrend from June. Technical indicators are neutral to slightly bullish overall, suggesting that direction is in question with a slight upward bias. The downtrend has become extremely oversold across all time frames and the developing oversold reaction will likely be violent.

Click for larger image.
crude-oil-2015-feb-12-600x700

Cycle Analysis

A cycle low signal was nearly generated today, indicating that the beta low (BL) likely formed on February 11. We are 1 session into the beta phase rally of the cycle following the short-term cycle low (STCL) on January 29. The magnitude and duration of the last alpha phase rally signals the likely transition to a bullish translation and favors additional short-term strength. The window during which the next STCL is likely to occur is from February 18 to March 4, with our best estimate being in the February 23 to February 27 range.

  • Last STCL: January 29, 2015
  • Cycle Duration: 10 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: February 18 to March 4; best estimate in the February 23 to February 27 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Click for larger image.
crude-oil-cycles-2015-feb-12-600x575

Short-term Outlook

  • Bullish Scenario: A close above congestion resistance in the 55 area would reconfirm the oversold reaction from late January and forecast additional gains.
  • Bearish Scenario: A reversal and close below the previous low at 44.38 would reconfirm the downtrend from June and predict additional losses.

The bullish scenario is more likely (~70% probable).

 









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