After letting the dust settle, our chartist discusses what wild price swings mean for Brent crude.
Futures markets successfully tied themselves up with reaction to news from Saudi Arabia over the weekend. During the very early hours of Monday morning, we watched as the markets tested the outer limits of an immediate trend, then the price recoiled in horror.
In the period since, we've witnessed a similar hiatus to Gatwick Airport and its famous allergy to drones. Bluntly, nothing conclusive is happening, despite a bunch of people awaiting take-off.
At time of writing, Brent crude is trading at around $64.70 a barrel, a substantial retreat from its high of $70.57 when the trading week opened. We're watching a trigger level at $63.70 fairly closely as this, if broken, is supposed to bring reversal to $61.46.
In itself, this is not sufficient to "prove" the market over-reacted to news of a big fireworks display in the Kingdom. But it will certainly cast substantial doubt against further growth expectations.
Below $61.46 and our doubts will multiply, suspecting we've just witnessed an over-hyped excuse for price movement as Brent enters a cycle down to $57.64!
Perhaps we're reading too much into the reaction of the world market in the cold light of sanity, while a true assessment of the damage is produced.
In the event the black stuff now exceeds $66.80, we shall regard this as early warning for price growth (again). Once triggered, our initial target computes at $69.75.
If (when) exceeded, our secondary is at $71.64, marginally above the knee-jerk opening price for the week and, therefore, in a region which expects a high of $77.5 eventually, along with the potential of a game-changing future.
For now, thanks to recent price movements, we're pretty firmly in the sceptical Gatwick Airport & The Drone camp.
Source: TradingView 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.
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