UKOil Top-Down Analysis

  • UKOil
    (${instrument.percentChange}%)

Weekly Chart


Past Performance: Past Performance is not an indicator of future results.

The chart above is FXCM's proxy for Brent, UKOil, on a weekly scale. From the mid-August low to the mid-October high, UKOil appreciated around 32%. We have used this impulse move for our reference trough (T) and reference peak (P). Since reaching P, UKOil has retraced to the 38.2% Fibonacci level (black horizontal). This level is currently supporting price and may be used as a platform to move higher. If so, this will chart a higher trough (HT?); a close above $82 (aqua ellipse) will form a potential swing low.

Daily Chart


Past Performance: Past Performance is not an indicator of future results.

If the weekly swing low charts as above, the daily UKOil chart makes for interesting analysis. The weekly swing low would coincide with the completion of a bullish flag continuation pattern on the daily (aqua parallel lines). This is a subtle but important point, a pattern is not a pattern until it completes. I.e. to confirm the bullish pattern, the flag needs to breakout.

Trade the News: View our Economic Calendar

Flags tend to form mid-trend as profits are banked. Thus, theory suggests that flags fly at half-mast. I.e. a breakout suggests a continuation in the previous trend direction and the target may be measured based on the trend leading into the pattern. This is referred to as a measured move and gives a target of $104.

Measured moves are theoretical. They may or may not be achieved. As such, I've indicated it using the dashed aqua horizontal. However, it does suggest that UKOil's potential is to the bullish side until proven otherwise.

Short-Term Analysis


Past Performance: Past Performance is not an indicator of future results.

The left chart shows the daily time frame. We note that the heiken ashi candles, a trend following indicator, have turned blue and moved from the pullback area to neutral. This is a positive move and coincides with the RSI moving to the bullish side of the oscillator (blue square).

The right chart shows the hourly time frame. Short-term momentum is waning, as seen by the weakening in the stochastic (aqua ellipse). Moreover, the trend following indicators looks to be crossing down (green ellipse), as the short-term chart suggests a pause. The gray central pivot (P), is the underlying support and is an area of interest. It may provide the basis for buying into the short-term dip. The hourly EMAs and stochastic need to turn bullish, to signal that short-term bulls are coming back into UKOil. If these triggers are charted, the stochastic moving back into 80, and holding that level will contribute to the daily flag breakout and weekly swing low.

Conclusion

The above technical picture looks bullish. To play out, market demand needs to reassert after the recent pullback. We note the coordination to release oil reserves. However, the volume here may only offer a temporary respite. As detailed in a previous article, supply is not the only contributing factor to the high oil price. There is a meaningful demand component as well. Moreover, if OPEC+ responds to the release of oil reserves by scaling back on its production schedule, the plan will have backfired.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

Published

Daily Market Snapshot

Most Popular Shares AU Shares Forex Stock Baskets Forex Baskets Cryptocurrencies Indices Commodities

Most Popular

Shares

AU Shares

Forex

Baskets

Baskets

Cryptocurrencies

Indices

Commodities

Most Popular

Shares

AU Shares

Forex

Stock Baskets

Forex Baskets

Cryptocurrencies

Indices

Commodities

Most Popular

Shares

AU Shares

Forex

Stock Baskets

Forex Baskets

Cryptocurrencies

Indices

Commodities

Symbol Bid Ask Spread Change
${instrument.name} ${instrument.name} ${instrument.bid} ${instrument.ask} ${ instrument.spread | formatSpread } ${instrument.percentChange}%

Last Updated: ${lastUpdated}

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

Risk Warning: Our service includes products that are traded on margin and carry a risk of losses in excess of your deposited funds. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)