New currency chart and forecast for Brent crude
Sterling's recovery from the September 2022 mini-budget crisis ended during the summer, but is a recent bounce sustainable? Independent analyst Alistair Strang also looks at prospects for the oil price.
9th November 2023 07:16
by Alistair Strang from Trends and Targets
When we previously reviewed the pound/dollar relationship in September, we warned of the importance of a drop target at $1.2081. The chart inset below shows this was achieved on 3 October, the pairing closing the session at 1.2076, a treacherous 5/10,000’s below our target and thus, one we’re inclined to ignore.
Obviously, we can be accused of being a little hypocritical, choosing to ignore one of our targets being broken, and we’d agree, especially as the bounce hasn’t yet confirmed “bottom” is in.
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For “bottom” to be confirmed, the price needs to exceed 1.2375 as this should provoke recovery to an initial 1.2575. Should such a level be beaten, our secondary calculation works out at 1.2905, and closure above such a point will suggest some strong recovery during the next year.
If things intend to go wrong for the pairing, below 1.2123 risks triggering reversal down to an initial 1.1937 with our secondary, if broken, calculating down at 1.1501.
Source: Trends and Targets. Past performance is not a guide to future performance.
Brent Crude
The current reversal cycle on the price of crude is really making us wait for the next contrived excuse to keep prices high. Will it be a Saudi refinery failing, Russia threatening some sort of embargo, or the US declaring reserves are dangerously low?
We’re cynical, but historically there has been a certain link between falling prices and manufactured headlines, attempting to keep crude oil high. It appears the market has ideas of its own though, recent reversals putting the price of Brent in a place where there’s a strong visual argument implying more trouble.
Below just $79.18 should now trigger reversals to an initial 77.81 with secondary, if broken, at 72.36 and perhaps a bounce. However, we do need to point out that such a reversal cycle places the price of Brent in a zone where a constant reversal cycle down to an eventual 57 dollars makes a lot of sense.
It will certainly be interesting, how long this weakness takes to translate into sane fuel prices?
Any serious attempt to escape the current reversal cycle needs the price of Brent to exceed 84.5 dollars to convince us. This risks triggering gains to an initial 88 with our secondary, if exceeded, an eventual 95 and some hesitation, due to the historical presence of prior highs.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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