Ready to attack Oil market

Ready to attack Oil market

              My trading methodology is that I find the opportunity and build my position in various markets where a significant trend will take place. I write post(here and here) before to say that gold and Euro are my target markets. Today, Crude oil is added to my list to attack. As usual, I am patient to entre the market until my trend following signals takes effective. You can use highly sensitive indicators to be your signals but the tradeoff is that the possibility of failure also is high. These indicators are not discussed here because it should be combined into your own capital management. I just say a significant trend is coming soon (let’s say within 1-2 month) in certain markets to reader in this blog. Back to Crude oil market, it had undergone an over 50% plunge since Jun, 2014. It is time for crude oil to make an impressive rebound at this moment. I explain to you by fundamental and technical factor.

             

               Figure 1: The latest public opinion towards crude oil hit a extremely pessimistic level. Most of bad news seemingly had discounted by the market.

Source: Sentiment Trader

               Figure 2: If crude oil rises four day in a row after hitting a low level. Average forward return after 3 month is over 18%.

Source: Nautilus Capital Research

               Figure 3: Rate of 1 year change of crude oil had reached a reflection point.

Source: Bloomberg

               Figure 4, 5 and 6: Crude oil is close to a bottom when comparing to historical pattern.

Source: Market Anthropology

Source: Market Anthropology

Source: Nordea markets and Macrobond

                Figure 7: Current percentage loss had been higher than historical average. 

Source: Ned Davis

                Figure 8: Most of countries cut their rate in the past 6 months. The latest update is Australia central bank join them to cut 0.25% official rate and PBoC announced a 50bp cut in bank required reserve ratio (RRR). Global easing policy at last can stimulate global growth to pick up in future several months. Crude oil can be higher possible to hit a bottom.

Source: PFS Group

                Figure 9: Currencies across the globe plunge against US dollar. It can boost their local demand when the import goods is cheaper. Lastly, it help to global growth to get back on the right track.

Source: PFS Group

                Figure 10: Smart money had flow into early cyclical sector to ready a global economic recovery.

Source: PFS Group

                Figure 11: Nordea Leading Indicator reveal OECD leading indicator will pick up as well as global economy.

Source: Nordea Market and Macrobond

                Figure 12: Now is time for Crude Oil to rally due to seasonality.

Source:Nautilus Research

                My bottom line is that Crude oil had been likely to reach a bottom and significant rally will take place. However, the rising trend tends to be unstable at the beginning after a waterfall decline. Bears and bulls fight against each other at this moment so the trend may fail to breakthrough several times so don’t forget a stick risk management in following the trend. However, I believe bull lastly will be the winner and an impressive rally will come in crude oil market in future 1-2 month.