NEW YORK (TheLFB-Forex) -- Here is the LFB-Forex technical view of where West Texas Intermediate crude oil is headed.
Quick View: WTI crude oil may see intraday bearish reversals when the commodity gets briefly overbought, but the broader bullish trend remains intact.
The outlook remains bullish because of heightened Middle Eastern tensions.
Countries that have natural reserves in oil are initiating moves away from excess holdings of dollars (in Treasury bills or cash) in a long-term plan that reduces exposure to dollar devaluations.
It make little sense to have dollar-denominated reserves in the ground and in the bank vault as well, especially when your major trading partner happens to be the U.S.
If the greenback depreciates, so will the reserves of the oil-producing countries. Saudi Arabia has started a move toward euros, and most other oil exporters are realigning as well, including Russia, and Venezuela, who are following Iran in asking for euro payments. It will be very interesting to see how this all plays out over the coming months.
Trend: Long. Momentum: Mixed. Sentiment: Mixed. Daily Trading Range: Extreme, $3.50 (4.4%). Daily Simple Moving-Average Lines: Blue (20-day SMA); Green (50-day SMA); Orange (100-day SMA); Red (200-day SMA).
Technical Wave: The first leg of an ABC-up structure formed back in September with the move from $74.50 to $86.50, the B-leg reversed to $83.00 and held support, which set up the C-leg that targeted $104.00. Now is the time to look for consolidation at support in preparation of the next move toward resistance, before the next sustainable moves unfold. The $95.50 and $104.50 area are main swing points of note.
Buy Support: Bullish traders will be looking to potentially buy the short reversals to $99.30 (the Fibonacci trend line formed from the move higher from $74.50 to $103.50), which could then target $102.50 and possibly $104.50.
