By Dean Rogers, GM & Senior Analyst, Kase and Company, Inc.
The U.K.’s vote for Brexit came as a shock to many investors and traders around the world. Equity markets have tumbled and oil followed suit as the U.S. dollar has risen substantially. Some pundits think the downturn in oil has been overdue, and warn that the market is still oversupplied and could slip further in coming weeks and months. Others hold the recovery will continue and that the decline is likely an overreaction to Brexit.
It is clear that sentiment is mixed. Charts tell a clearer story. The long-term bias is positive, and ultimately odds still favor the move up. However, the downward correction is poised to continue for the near-term.
August WTI met confluent support near $46.0 on Monday. This was in line the 0.618 projection of the wave $50.54 – 46.7 – 48.45 and 1.382 projection of the wave $48.45 – 46.92 – 47.96. Near-term odds favor a decline to at least $44.7, the 1.00 projections of the waves $52.28 – 46.4 – 50.54 and $50.54 – 46.7 – 48.45. This is a very important target and decision point for WTI. A close below $44.7 would open the way for targets in the low $40s. It is at those targets that the market will need to decide whether the move up will continue or a long-term bearish outlook would be adopted again.
The upward correction that began late Monday afternoon may extend to $46.8 and even $47.5 in early trading Tuesday. $47.5 should hold. A close over $47.5 would call for a test of key resistance levels above $50.0, that if overcome, would indicate the downward correction is over.
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About The Author
Dean Rogers is the General Manager and Senior Analyst at the Kase Call Center. Dean began his career with Kase and Company, Inc. in early 2000 as a part-time programmer. Early in his career with Kase, Dean wrote programs and modules to help expedite and automate parts of Kase’s internal forecasting and hedging systems. He also worked extensively with the Kase StatWare® trading indicators. With this work, he quickly became passionate about the markets, and in particular, technical analysis. Dean’s new found market enthusiasm, along with his strong work ethic and dedication to Kase and its clients, resulted in him becoming Ms. Cynthia A. Kase’s protégé and ultimately her “right hand man”.
Dean oversees all of Kase’s day-to-day operations and writes Kase’s award winning weekly and quarterly crude oil and natural gas forecasts. He also teaches at Kase’s technical analysis and energy risk management courses, manages all programming and development, and collaborates closely with Ms. Kase in developing new software and carrying out quantitative analytics research.
Dean is a member of the Market Technicians Association, has been quoted in numerous publications including the Wall Street Journal®, Bloomberg® and Reuters® publications, and Black & Veatch’s® Cap Markets Report. He has also been published in Technical Analysis of Stocks and Commodities® magazine and contributed articles to various eSignal™ and Bloomberg® publications.