WTI Crude: Bears Testing 102.0 Once Again Before DOE Numbers
Mingze Wu | Oct 02, 2013 06:59AM ET
The outlook for Crude continues to look bleak. The latest API data shows a larger than expected growth in inventory, signalling a weaker than expected implied demand. This is yet another setback for Crude which has been one of the most bearishly affected assets following the confirmation of US Government shutdown, pushing Crude oil down once again at the end of the US session even though prices have rebounded post US midday.
Considering that US stocks have been bullish for the past 2 days, the decline in Crude underlines the inherent bearishness surrounding black gold right now. Today’s Department of Energy inventory data may reveal the soft demand further, potentially sending prices below 101.5 and usher in further bearish acceleration today.
Hourly Chart
From a technical perspective, further bearish acceleration makes sense given that price is being squeezed between the descending Channel Top and the 102.0 flat support. However, that is only half the story. It is definitely possible that we could still see a short squeeze which can propel prices up towards 102.5 considering how prices have been more than adequately supported above 102.0. Stochastic readings support a mild bearish outlook with a peak formed just under the 50.0 level, but the Stoch level has flattened significantly and similarly could rebound above the 35.0 mark much like the recent trough just a few hours ago.
Weekly Chart
The long-term technical outlook is bearish, but prices will need to close below 102.0 this week as further confirmation for the 103.0 breakout. This will help to accelerate bearish movement towards a long term target of 85.0+ levels with 98.0 providing interim resistance. However, if the short-term short squeeze does happen and manages to send prices up above 103.0, the breakout will be invalidated and bias will be to the upside, opening up the 108.5 – 112.5 ceiling as a bullish target.
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