Light crude oil futures technical analysis and trade idea, for short

👋 Hello traders and investors! This is Itai Levitan from ForexLive.com, bringing you the latest technical analysis and trade ideas for Light Crude Oil Futures. Let’s dive into the current market setup and discuss potential strategies for your consideration.

Oil futures trend analysis 📈

We are observing an interesting pattern with Light Crude Oil. Recently, oil pierced a significant trend line, attempting a breakout but ultimately failing. This breakout attempt was aligned with the first upper standard deviation of the Volume Weighted Average Price (VWAP) anchored from the beginning of 2023. Given this failed breakout, it appears that the bears might have an upper hand at the moment.

Market response at 84 USD TO 85 USD 📉

Following the failed breakout, we have seen an initial decline of over 1%. This movement is critical as it sets the stage for a potential entry point.

Trade idea – short oil 🎯

Entry point

• Entry: $82.40

This entry point is very close to the current market price and provides a strategic position based on the recent technical behavior.

Stop loss

• Primary stop: $84.00
• Tighter stop option, see video above: $83.70

The primary stop is set just above the $84.00 level to protect against further upward movements. Traders preferring a tighter stop can opt for $83.70, which is still above the upper standard deviation but offers a more favorable risk-reward ratio.

Take profit targets

• First target: $80.26
• Second target: $78.16
• Third target: $76.80
• Fourth target: $72.85

These targets are strategically placed. The first target allows for partial profit-taking, reducing risk exposure as the trade progresses. Subsequent targets provide opportunities to capture additional profits as the market moves in our favor.

Risk-reward analysis

• Risk-Reward Ratio: Approximately 4.5:1

By averaging out the take profit targets, we achieve a balanced and favorable risk-reward ratio. This setup allows for substantial profit potential while managing risk effectively.

Trade tips 📝

1. Monitor lower time frames if you still want to enter but saw this late: It’s essential to keep an eye on lower time frames to refine your entry point and ensure optimal timing.
2. Partial profits: Taking partial profits at different targets is a professional approach to secure gains and manage risk.
3. Adjust stop loss: After reaching the first profit target, consider moving your stop loss to the entry point to protect your position and minimize potential losses.

Remember, this analysis and trade idea is an orientation for you to consider. Always trade at your own risk and perform due diligence before entering any positions. Stay tuned to ForexLive.com for additional insights and perspectives. Happy trading!

Thank you for reading, and good luck! 🍀

This article was written by Itai Levitan at www.forexlive.com.

• Need more certainty that inflation pressures have subsided sustainably
• Looking closely at labour market conditions and inflation indicators such as services inflation
• Recent wage data is consistent with the idea that „underlying“ unemployment rate has risen
• There are considerable second-round effects at play currently, will fade over the coming years

It’s good that his remarks are focusing on their goals and not sidetracked by the election. And it also speaks to which camp he is on I guess, since the June decision was supposedly „finely balanced“ even if the vote was 7-2.

This article was written by Justin Low at www.forexlive.com.

According to the EU’s Copernicus Climate Change Service (C3S), 2024 is on course to rank as the hottest year on record as climate change continues to push temperatures to record highs so far this year. They are pinning it as an approximately 95% probability that this year will beat the record set in 2023 last year.

If so, that will mean temperatures recorded globally this year will be the hottest since such records began in the mid-1800s.

C3S is out with the statement after last month ended up being the hottest June month on record.

Besides the obvious from climate change, El Nino hasn’t helped in relieving the world from the heat this year. The phenomenon is said to warm the surface waters of the eastern Pacific Ocean, leading to a rise in global average temperatures.

Global warming might not impact markets directly but as the above trend continues, it is worth taking notice. These sort of weather conditions do have an impact on certain commodities and in terms of demographics, it also impacts consumer behaviour to a certain extent.

It’s the simple things like:

• Should I go out (possibly spending more money) or should I stay in today?
• Should I invest in an air conditioner?
• Where should I go for a cooling and breezy holiday?
• The weather is so hot, maybe I should buy an iced tea to quench the thirst.. etc

This article was written by Justin Low at www.forexlive.com.

• The next truly open meeting is in September
• We are comfortable with the progress in disinflation, market pricing on rate cuts

It isn’t anything that we don’t already know. Knot also adds that the date in which they must meet the inflation target must not slip beyond 2025. Well, we’ll see. I mean, they have a knack of kicking the can down the road.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

The USD weakened across the
board last Friday following the soft US
NFP report. The data showed some more labour market cooling with an
increase in the unemployment rate and a decrease in wage growth. We basically
have an economy that is slowing but growing. We will see if the market will be
able to keep the positive sentiment on soft landing hopes or start to worry
about a recession. All eyes will now be on the US CPI and US Jobless Claims figures on Thursday.

The CAD, on the other hand,
gained last week against the US Dollar mainly because of the risk-on sentiment as
the US data continued to support at least two rate cuts from the Fed but didn’t
send recessionary signals. For the CAD, the next big event will be the CPI
report on July 16th. We saw another jump in wage growth in the
latest labour
market report, so the BoC will likely need good CPI figures to deliver a
rate cut in July.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD has recently dropped back to the bottom of the range at the key
1.36 support
zone where the price bounced off of last Friday.

The buyers will likely keep
on stepping in around these levels to position for a rally back into the 1.3785
resistance with a better risk to reward setup. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
new lows with the 1.35 handle as the first target.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price action remains rangebound between the 1.36 support and the
1.3785 resistance. There’s not much to do here and the market participants will
likely keep on “playing the range” until we get a breakout.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price broke out of the recent downward minor trendline that was defining the bearish
momentum before bouncing from the support. This could be a signal of a change
in momentum.

The buyers will want to see
the price breaking above the most recent lower high at 1.3643 to increase the
bullish bets into the 1.3785 resistance. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is a bit bare on the data front but nonetheless we will have some key
economic releases. Tomorrow, we have Fed Chair Powell testifying to Congress
and the markets will be focused on any view or hint about the monetary policy
trajectory after the recent NFP report. Thursday will be the most important day
of the week as we get the US CPI and the US Jobless Claims figures. Finally, on
Friday, we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

UPCOMING EVENTS:

• Monday: Japan
  Wage data.
• Tuesday: US
  NFIB Small Business Optimism Index, Fed Chair Powell Testimony.
• Wednesday: Japan
  PPI, China CPI, RBNZ Policy Decision, Fed Chair Powell Testimony.
• Thursday: UK
  GDP, US CPI, US Jobless Claims.
• Friday: New
  Zealand Manufacturing PMI, US PPI, US University of Michigan Consumer
  Sentiment.

Tuesday

Fed Chair Powell will testify to the
Senate Banking Committee on Tuesday and the House Financial Services Committee
on Wednesday. The market participants will be attentive to any view or hint
about the monetary policy trajectory after the recent NFP
report.

The text is generally released before
the testimony so that will be scanned for clues or “bias”,
but the market will also be focused on the Q&A session following the
opening remarks. Given the recent data, Powell will likely lean on the dovish
side.

Wednesday

The RBNZ is expected to keep interest
rates unchanged at 5.5%. As a reminder, the central bank delivered a hawkish
hold at the last
meeting as they raised the Official Cash
Rate forecasts and pushed back the first rate cut to late 2025. The market
continues to expect 41 bps of easing by the end of the year.

Thursday

The US CPI Y/Y is expected at 3.1% vs.
3.3% prior, while the M/M measure is seen at 0.1% vs. 0.0% prior. The Core CPI
Y/Y is expected at 3.4% vs. 3.4% prior, while the M/M figure is seen at 0.2%
vs. 0.2% prior.

This is going to be an important release.
I think the Fed will be more dovish at the next meeting if we get a good
report. Then, if we get some more benign figures in August, Fed Chair Powell
will likely pre-commit to a rate cut in September at the Jackson Hole
Symposium.

The US Jobless Claims continue to be one
of the most important releases to follow every week as it’s a timelier
indicator on the state of the labour market.

Initial Claims remain pretty much stable
around cycle lows and inside the 200K-260K range created since 2022. Continuing
Claims, on the other hand, have been on a sustained rise recently with the data
printing new cycle highs every week.

This shows that layoffs are not
accelerating and remain at low levels while hiring is more subdued. This is
something to keep an eye on. This week Initial
Claims are expected at 240K vs. 238K prior,
while Continuing Claims are seen at 1860K vs. 1858K prior.

Friday

The US PPI Y/Y is expected at 2.3% vs.
2.2% prior, while the M/M measure is seen at 0.1% vs. -0.2% prior. The Core PPI
Y/Y is expected at 2.5% vs. 2.3% prior, while the M/M figures is seen at 0.2%
vs. 0.0% prior. I don’t expect this data to influence the market much given
that the sentiment will be set by the CPI report the day before.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

I believe that global central bankers are on the verge of making a growth-wrecking mistake.

Generals always fight the last war and central bankers are going to continue to fight the ghost of inflation, even as it becomes increasingly clear that the inflationary threat is over and the bigger risk is recession.

On Thursday, ECB chief economist Phillip Lane noted that firms are telling them that wage pressures are coming down. Their wage tracker also shows much slower wage growth in 2025 and 2026. There won’t be any second-round effects.

With the benefit of hindsight, it will soon be clear that the past-pandemic inflation was a one-off perfect storm caused by:

1. Ultra-low rates, including irresponsible forward guidance
2. Out of control fiscal spending
3. Supply shock

We combined all three and all it got was 9% inflation. All it took to quell it were 5% rates.

Does that sound like a new inflationary normal, or a blip in a long disinflationary cycle?

To illustrate how insane the monetary policy was. This is what the Reserve Bank of Australia did:

1. Cut the Cash Rate to 0.10%,
2. Bought $100b via QE over six months
3. Pledged to buy $5 billion of government bonds a week with a commitment to continue until Feb 2022
4. Targeted 3-year note yields at 0.10%
5. Guided to not hiking rates until ‚at least‘ 2024

They certainly weren’t alone as central banks the world over were caught in an easing mania — they went ‚full nuclear‘. Ten-year US note yields were below 2% for two years and below 1% for much of that. It was free money.

It was the same with governments. The US Paycheck Protection Program scam gave away $800 billion with minimal oversight. Much of that went straight into the pockets of small business owners. There were $850 billion in stimulus checks, followed by another $900 dose, enhanced unemployment benefits cost $680 billion. Compare that to the financial crisis, which authorized $700 billion in loans that actually had to paid back.

Finally, a great source of inflation via supply chains. All this money and low-interest lending was going to consumers who did things like decide to renovate, build fence and decks. Lumber prices went parabolic.

Supply chains were wrecked in autos, computer chips, consumer goods, meat, steel and dozens of other places.

Yet still: Just 9% inflation.

I’m not saying it wasn’t painful and I think the lags in measuring things like housing mean that inflation was more in the 12-15% range but it was a once-in-a-lifetime event.

Yet somehow central bankers are treating it like it was the start of a new normal. Compounding that insanity is that we’ve seen the dawn of generative AI in the past 20 months. That’s undoubtedly deflationary, something I talked about yesterday with BNNBloomberg (near the end):

I also wrote about it here.

When the economic history of the pandemic is definitively written, it will emphasize that it was a one-off event in a long, disinflatioary cycle that was worsened by central banks keeping rates too high for too long.

I believe this is a rare moment to lock in investments with high rates for a long duration in the same way that the pandemic was a once-in-a-lifetime to lock in low borrowing rates.

This article was written by Adam Button at www.forexlive.com.

• NASDAQ closed at new record levels each day of this trading week
• US Sen Warren seeks to assemble a group of Democratic senators to ask Biden to exit race
• Key events and releases for traders in the upcoming trading week
• Crude oil futures settle at $83.16
• Geopolitics: Head of Israel’s Mossad returned from Doha after initial cease-fire meetings
• Baker Hughes oil rig count 479 unchanged on the current week 101
• New York Fed Nowcast growth estimate for Q2 falls to 1.8% down from 1.93% last week
• European equity close: French stocks cautious ahead of Sunday’s vote
• SNB’s Jordan „relatively comfortable“ with inflation
• Fed mon pol report: Labor supply-demand balance resembles pre-pandemic period
• Rachel Reeves becomes Britain’s first female Chancellor
• Timiraos: The Fed may start the debate about a Sept cut at the upcoming meeting
• Putin: We see Orban’s visit as an attempt to restore the dialogue
• Canada June PMI 62.5 vs 52.0 expected
• The gold market may have found a second leg
• Kickstart the FX trading day for July 5 w/a technical look at the EURUSD, USDJPY & GBPUSD
• US dollar chops after non-farm payrolls
• Canada June employment change by -1.4K versus 22.5K estimate
• US May non-farm payrolls +206K vs +190K expected
• The JPY is the strongest and the USD is the weakest as the NA session begins
• What are the Fed odds saying ahead of the jobs report later?
• ForexLive European FX news wrap: On to the NFP next

The US jobs report showed Non-Farm Payroll up a greater than expected 206K vs 190K estimate. However, the details of the report were less than stellar.

• Revisions to prior 2 months was -111K. That more than offset the above expected growth this month.
• The unemployment rate moved to 4.1%. The highest rate since November 2021
• Average hourly earnings YoY came in at 3.9% which is the lowest level June 2021
• The gain in Non-farm payroll was helped by a large 70 K rise in government jobs private education and health also added 82K. The two sectors accounted for 74% of the total gain for the month
• Temporary help fell -48K which is indicative of a slowing job market
• Professional and business services fell -17 K
• Leisure and hospitality – a strong job grower in the post pandemic recovery and indicative of discretionary spending – rose only 7K .

Below is a summary of the jobs data:

The initial reaction in the forex market was the dollar moving higher, but those gains were quickly reversed as yields also reversed to the downside.

The USD is ending the day as the 2nd weakest of the major currencies behind the CAD. The largest declines were versus the GBP (-0.45%), the CHF (-0.49%) and the NZD (-0.48%).

In the US debt market, yields moved lower with the shorter end moving the most as traders increased the expectations for rate cuts in September and through the end of the year.

Looking at the yield curve, a snapshot shows:

• 2-year yield 4.605%, -8.7 basis points
• 5-year yield 4.226%, -8.3 basis points
• 10-year yield 4.278%, -6.9 basis points
• 30-year yield 4.475%, -4.4 basis points

For the trading week yields were solidly lower as well with :

• 2-year yield down -14.8 basis points
• 5-year yield down -14.9 basis points
• 10-year yield down -11.8 basis points
• The 30-year yield down -8.0 basis points

The declining yields also helped to push stocks higher and complete a week that saw the NASDAQ index close at record levels for each day the holiday shortened week.

• Dow Industrial Average average rose 0.17%.
• S&P index rose 0.55%.
• NASDAQ index rose 3.5%, its best week since April 22

Despite the sharp rise in broader stock indices, bitcoin had a horrible week on by nearly $6000 to -$56,718 currently.

Crude oil prices did rise by $1.62 or 1.99% despite being lower today by $0.72 for -0.86%.

This article was written by Greg Michalowski at www.forexlive.com.

All three major indices closed higher today. For the NASDAQ it closed higher for the fourth consecutive day. Each of those days was a new record close. The S&P index has higher for its fourth consecutive day with three of those closes being at new record levels.

A snapshot of the closing levels shows:

• Dow Industrial Average average rose 67.87 points or 0.17% at 39375.86
• S&P index rose 30.19 points or 0.55% at 5567.20.
• NASDAQ index rose 164.46 points or 0.90% at 18352.76

The small-cap Russell 2000 fell -9.89 points or -0.49% at 2026.72

For the trading week:

• Dow Industrial Average average +0.66%
• S&P index +1.95%
• NASDAQ index rose 3.5%
• Russell 2000-1.02%

For the trading year:

• Dow Industrial Average average of 4.47%
• S&P index +16.72%
• NASDAQ index plus a 22.26%
• Russell 2000 is unchanged this year

Some of the record highs today included Alphabet, Meta Platforms,, Amazon, Microsoft, Oracle, and Apple.

Tesla closed higher for its seventh consecutive day. For the trading week, shares rose by 27.12%. For the trading year, Netflix has erased all his losses and trade up 1.22% on the year. At session lows this year the price was down -109.68 points or -43%.

In comparison to the other 6 of the Magnificent 7

• Nvidia rose 1.85%, and is up 154.09% this year
• Meta Platforms rose 7.08%, and is up 52.53% this year
• Amazon rose 3.49%, and is up 31.63% this year
• Alphabet rose 4.64%, and is up 36.44% this year
• Apple rose 7.46%, and is up 17.56% this year
• Microsoft rose 4.61%, and is up 24.34% this year

Shares of Netflix are closing just below its record high close of $691.69 from November 17, 2021. The closing level today was $690.65, up 2.34% on the week.

Oracle shares closed higher by 2.57%, and is up 37.37% for the year

This article was written by Greg Michalowski at www.forexlive.com.

US Sen. Mark Warren is seeking to eight symbol a group of Democratic senators to ask Pres. Biden to exit the race for president. Biden has been losing support on Capitol Hill and also amongst his financial supporters according to sources..

This article was written by Greg Michalowski at www.forexlive.com.