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Forecast of the Day
[Image: Is-This-A-Dollar-Rally-or-EURUSD-Tumble-...ture_2.png]

Fundamental Forecast for Dollar:Neutral

Top event risk for the week ahead is the 3Q US GDP figures which could indeed alter December rate forecasts
With the exception of EUR/USD and USD/CAD, the Dollar was either little changed or lower against the majors last week
See our 4Q forecasts for the US Dollar and market benchmarks on the DailyFX Trading Guides page

The ICE Dollar Index (DXY) posted another impressive week’s advance through this past Friday. That marks three consecutive weeks that the benchmark currency has climbed to eight-month highs – and at the fastest pace since the November rally back to 12-year highs. Given this performance, traders are left to wonder if the Greenback has changed gears and returned to the bull trend that was waylaid nearly 18-months ago. There are certainly go-to fundamental rationalizations for those looking to jump on the momentum: the Fed is promising a hike in the foreseeable future; ominous clouds over risk trends necessitate a safe haven; and faltering commodity trend will indirectly bolster the primary pricing instrument. Yet, these are overreaching for convenience. Congestion is a more universal condition, and the Dollar’s performance is far from uniform.

When taking measurements, it is important to understand your tools and their calibrations. For those referencing the DXY, its performance does look impressive. Yet, there is a distinct concentration to this barometer that provides a skew to the signal. The ICE index is trade-weighted, which given heavy weighting to EUR/USD (the most liquid exchange rate in the FX market by a wide margin). This benchmark pair dropped 2.8 percent over the past two weeks – the biggest Dollar move amongst the majors – to a 7-month low. The other ‘majors’ were bound to their ranges. That would suggest the Dollar could take limited credit for this progress.

Technically speaking, the Greenback could capably rally forever should its major counterparts consistently lose ground. However, that is unlikely in a market defined by congestion and uneasy complacency. From the Euro, lost ground after the ECB’s decision to defer its taper announcement doesn’t write the script for a full topple for the currency. Pound has shown greater resilience to Brexit headlines this past week. Yen and commodity-based crosses meanwhile are waiting for their cues from risk benchmarks. This is not a cast of characters that seem likely to put the Dollar in the spotlight.

Looking out over the coming week’s docket, however, there is reason to believe the Greenback may be able to rest back control of its own bearings. Monetary policy is generally the most productive theme for the FX market these past years, so it is reasonable to presume that it would offer the most ready traction should it look for grip. Speculation is not focused on the November 2nd meeting (due in part to its proximity to the US Presidential Election and the uncertainty that event presents) but rather the December 14th ‘anniversary’ to the first the first hike. Fed Fund futures price approximately a 66 percent probability that the central bank moves at that meeting.

To bolster the conviction of a 12-month follow up to ‘liftoff’, the most capable event to move the needle is the US 3Q GDP update. This is the kind of systemic assessment of the economic picture that can be considered black-and-white in defining the conditions for monetary policy. A significant rebound from the second quarter’s moderate 1.4 percent pace could solidify hike motivation. Indeed, the consensus forecast is for a pickup to a 2.5 percent pace of expansion. Yet, it should be said that such a forecast sets the bar high. Further, this key event is due at the very end of the week.

Other fundamental fodder to move the rate view and/or the Dollar include a host of Fed speeches penciled in. The terms of this policy group’s tone is changing with remarks like those made by San Francisco Fed President John Williams who said they should have hiked in September and low rates can lead to a recession. Another indicator to keep tabs on is the Conference Board’s consumer sentiment survey. Both the headline and components are valuable forecasting for economic activity moving forward.
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Fundamental Forecast for the Australian Dollar: Neutral

After ten years at the head of the bank, ex-Governor Glenn Stevens handed over the reins to Dr. Phillip Lowe last month. And while the Australian economy has now went 25 years without an actual recession, a lack of inflation as global growth has cooled has raised some very serious questions about sustainability of Australian growth.

Global markets are still very much in the ‘getting to know you’ stage with Dr. Lowe. This week marked his first speech as the head of the RBA, and while markets had little expectation for any near-term moves on rates; Dr. Lowe struck a balanced tone towards future cuts that helped to drive the Australian Dollar higher in the first three days of the week, with AUD/USD setting a fresh two-month high. In this speech, Dr. Lowe highlighted the fact that current low levels of inflation are not unprecedented in the Australian economy. He went on to note that since June of 1993, inflation has been below the bank’s 2% target approximately 24% of the time. But on the other hand, inflation has been above the bank’s 3% target roughly 23% of the time. Dr. Lowe continued by saying ‘what is important is that we deliver an average rate of inflation consistent with the medium-term target.’

While this does add a bit of opacity to future rate moves out of the bank, it does show that Dr. Lowe is taking a ‘big picture’ look at the situation with a great deal of historical context regarding near-term rate moves. It appears that he’s diverging from many of his contemporaries at other major Central Banks that are expressing grave concerns around lagging inflation and slower growth. This could be a positive for an Australian currency that’s dropped by -31.4% from the highs set in 2011.

While rate cuts might seem like a quick way to restore a bit of growth with some inflationary pressure, the simple fact of the matter is that this transmission mechanism appears to have seen diminishing marginal returns in many developed economies; namely Japan and Europe - each of whom went to negative rates in the recent past, but have yet to see any signs of promise or benefit in growth or inflationary numbers. While Australian rates might get nudged down in the near-future (after Q1, 2017 most likely, if at all), the RBA also has to contend with elevated asset levels in key markets, particularly real estate. This creates an uncomfortable scenario for Australian investors, and will likely need to be addressed by macro-prudential measures from the RBA should growth and inflation numbers continue to slow while asset prices remain high. This just further adds to the opaque nature of current economic projections for the Australian economy, in which slowing growth and elevated asset prices create divergent forces for the RBA to simultaneously contend with.

One benefit of this opacity is the fact that it may actually offer traders an amount of near-term clarity regarding Australian data prints. While many currencies are being driven by some extraneous driver produced from the representative Central Bank, like the prospect of more QE, this doesn’t appear to be a concern at the moment in Australia. More likely, we’re going to see markets paying more attention to Australian data as somewhat of a direct driver in the Aussie, with special focus being centered on inflationary data.

Next week brings us such a data point: On Tuesday evening in the United States (Wednesday morning in Australia), 3rd quarter GDP will be released. Current expectations are looking for .5% Quarterly growth to go along with 1.1% annualized growth. Should this number come out above expectations, we’ll likely see some element of strength in the Aussie with a miss bringing weakness into the currency.

However, due to the still opaque nature of the fundamental backdrop for the Australian Dollar, as highlighted by the dual forces of slowing growth with elevated asset prices whilst a new Central Banker takes over the top job at the bank, the forecast for the week ahead will be retained as neutral.
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Fundamental Forecast for Euro: Neutral

- ECB President Draghi dispatched speculation of an immediate tapering of QE.

- Traders forced to ‘kick the can’ down the road until December.

- Have a bullish (or bearish) bias on the Euro, but don’t know which pair to use? Use a Euro currency basket.

The Euro took another leg lower this week, sliding deeper in its losing streak as markets were forced to deal with reality: the European Central Bank would not be tapering its QE program immediately. EUR/CAD was the only EUR-cross above water this week (+0.65%), with EUR/JPY (-1.18%) and EUR/NZD (-1.86%) leading the way to the downside as a result.

Mincing no words: it was clear markets were mispricing the ECB rate decision on Thursday. The highly sensitive nature of the Euro to the simple absence of information about the future path of the ECB‘s easing – and then President Draghi’s forceful, ‘we haven’t discussed anything’ approach – is evidence of this mispricing. Either way, what is clear is that Thursday’s ECB meeting was a lesson in ‘Kicking the Can Down the Road 101’: Draghi & co. absolved themselves of any responsibility until the committees tasked with “ensuring the smooth implementation” of the QE programs returns with their notes at the December meeting.

“Ensuring smooth implementation,” in context of the ECB’s desire to maintain its QE program until the medium-term inflation target of +2% is reached, is to prevent collateral scarcity issues from cropping up and perhaps leading to a European ‘taper tantrum.’ Given how far away inflation reality is from the ECB’s target, it would seem that “ensuring smooth implementation” means the ECB is not concerned with upping the size of the QE program.

What will likely happen: at an upcoming meeting, the ECB will indicate that it needs to adjust the way its bond buying program is conducted. The ECB allots its bond buying based on the capital key. What is the capital key? The capital of the ECB comes from the national central banks (NCBs) of all EU member states. According to the ECB, the NCBs’ shares in this capital are calculated using a key which reflects the respective country’s share in the total population and gross domestic product of the EU.

As such, it's no surprise that Germany - as the country with the largest capital key contribution - has seen the belly of its yield curve (3Y-7Y) drift lower into negative territory, below the ECB's -0.40% deposit level - the threshold at which the ECB no longer purchases bonds in its QE program. Likewise, the ECB needs to either: remove the limiting parameter of -0.40% on its bond buying; or discard the capital key variable. In the first case, German yields would like move lower the fastest; in the second, peripheral yields like in Italy and in Spain.

Further, when these changes to the QE program are made, it is likely that an extension of the program is announced, perhaps with some tapering built in. For example, markets had been pricing the QE program to run through the end of March 2017 (roughly €400 billion in asset purchases remaining), but a six month extension even at a slower pace of purchases (say, to €55 billion per month for three month and €20 billion per month for three months) would still amount to a significant increase in easing (roughly an additional €225 billion in asset purchases) above prior expectations.
5 Minutes 15 Minutes Hourly Daily

EUR/USD - 1.0882
Moving Averages: Sell Strong Sell Strong Sell Strong Sell
Indicators: Strong Sell Strong Sell Neutral Strong Sell
Summary: Strong Sell Strong Sell Sell Strong Sell

GBP/USD - 1.2165
Moving Averages: Sell Strong Sell Strong Sell Strong Sell
Indicators: Strong Sell Strong Sell Strong Sell Strong Sell
Summary: Strong Sell Strong Sell Strong Sell Strong Sell

USD/JPY - 104.28
Moving Averages: Strong Buy Buy Strong Buy Strong Buy
Indicators: Strong Buy Strong Buy Sell Strong Buy
Summary: Strong Buy Strong Buy Neutral Strong Buy

USD/CHF - 0.9953
Moving Averages: Buy Strong Buy Strong Buy Strong Buy
Indicators: Strong Buy Strong Buy Sell Strong Buy
Summary: Strong Buy Strong Buy Neutral Strong Buy

AUD/USD - 0.7689
Moving Averages: Strong Buy Strong Buy Strong Buy Strong Buy
Indicators: Strong Buy Strong Buy Strong Buy Strong Buy
Summary: Strong Buy Strong Buy Strong Buy Strong Buy

EUR/GBP - 0.8945
Moving Averages: Strong Buy Strong Buy Strong Buy Strong Buy
Indicators: Strong Buy Strong Buy Strong Buy Buy
Summary: Strong Buy Strong Buy Strong Buy Strong Buy

USD/CAD - 1.3352
Moving Averages: Sell Buy Buy Strong Buy
Indicators: Buy Buy Strong Buy Strong Buy
Summary: Neutral Buy Strong Buy Strong Buy

NZD/USD - 0.7150
Moving Averages: Strong Sell Strong Sell Strong Sell Sell
Indicators: Strong Sell Strong Sell Sell Neutral
Summary: Strong Sell Strong Sell Strong Sell Neutral

EUR/JPY - 113.47
Moving Averages: Strong Buy Buy Sell Sell
Indicators: Strong Buy Buy Strong Sell Strong Sell
Summary: Strong Buy Buy Strong Sell Strong Sell

EUR/CHF - 1.0832
Moving Averages: Buy Strong Buy Buy Sell
Indicators: Strong Buy Strong Buy Neutral Strong Sell
Summary: Strong Buy Strong Buy Neutral Strong Sell

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The near-term advance in AUD/JPY appears to be getting exhausted, with the pair at risk of resuming the downward trend carried over from late-2014 as it appears to have made another failed attempt to break the 200-Day SMA (80.14).

With market attention turns to the key developments coming out of Australia, a series of dismal data prints accompanied by dovish rhetoric out of the of Reserve Bank of Australia (RBA) may drag on the local currency especially as the central bank anticipates the low-inflation environment to ‘remain the case for some time.’ In contrast, the Bank of Japan (BoJ) may stay on the sidelines as Governor Haruhiko Kuroda and Co. assess the impact of the ‘yield-curve control’ dynamic for its quantitative/qualitative easing (QQE) program, and the near-term weakness in the Japanese Yen may largely unravel should the central bank endorse a wait-and-see approach for the remainder of the year.

With that said, AUD/JPY stands at risk of facing increased volatility going into the slew of interest rate decisions lined up for November, and the recent developments in the Relative Strength Index (RSI) casts a bearish outlook for the exchange rate as the oscillator fails to retain the bullish formation carried over from the previous month. In turn, it may only be a matter of time before price follows the RSI, with a break/close below 78.60 (61.8% expansion) opening up the next downside target around 77.90 (38.2% retracement) followed by the Fibonacci overlap around 75.80 (23.6% retracement) to 76.10 (38.2% expansion).

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  • The near-term rebound in EUR/USD may unwind over the days ahead as it appears to be establishing a bear-flag formation, and the pair may continue to give back the advance from earlier this year as price & the Relative Strength Index (RSI) preserve the downward tilt carried over from the end of August; a move back above the Fibonacci overlap around 1.0940 (61.8% retracement) to 1.0970 (38.2% retracement) would raise the risk for a test of trendline resistance.
  • The Euro stands at risk of facing additional headwinds over the remainder of the year as European Central Bank (ECB) board member Ewald Nowotny warns the Governing Council will make a decision in extending its asset-purchase program at the December 8 policy meeting, but the committee may also need to adjust the guidelines surrounding the non-standard measure as officials look at other available assets to add onto its balance sheet.
  • Failure to break below the March low (1.0822) may encourage a larger rebound going into the end of the month, but the broader outlook for EUR/USD remains tilted to the downside , with the next downside region of interest coming in around 1.0780 (100% expansion) to 1.0800 (23.6% retracement).
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Fundamental Forecast for Dollar:Bearish
  • There is only a 17 percent probability of a November 2nd Fed rate hike, while it stands at 69 percent on December 14th
  • Risk trends and volatile counter currency winds should be monitored closely by Dollar traders
  • See our 4Q forecasts for the US Dollar and market benchmarks on the DailyFX Trading Guides page
What fundamental winds bode well for the US Dollar and which portend trouble? There are simplistic expectations set out for the world’s most liquid currency, and that can lead to misconceptions and unwanted surprise for traders. The interest rate advantage that the Greenback has rode through these past months and years can quickly turn into a burden. Meanwhile, the readily accessible safe haven identity that purloins so much optimism can flip the Dollar should an increasingly-likely confidence stumble occurs in the face of heavy event risk. This benchmark currency is turning into one of the more complicated yet highly-susceptible-to-volatility instruments in the financial system.

Like a beacon through the rough fundamental seas ahead, the FOMC rate decision on Wednesday will call traders forward. As the most bold central bank (the only major institution to hike thus far) fronting the world’s largest economy, the Fed’s actions carry a strong influence. Yet, that does not imply a necessary outcome. Despite the group’s effort to try and acclimatize the market to an eventual second rate hike in its very slow pace of normalization, a move at this time would be self-sabotage. While the Fed targets inflation and employment, it is also primarily interested in financial stability. That said, a highly experimental second rate hike in an increasingly anxious market when there is a very contentious US Presidential Election less than a week away; is too likely to trip risk aversion.

In the event that the Fed were to hike, it would be an extreme reaction. The Dollar’s rally would likely be quickly snuffed out by the slump in general capital markets which could in turn translate into economic uncertainty. The lift in the Greenback is currently founded on expectations of tightening further out, not on the measly 25 bps of tightening from last year and another 25 bps this year. A slump in financial system and growth expectations would scuttle future normalization and undermine the Dollar’s yield premium. It could in turn revive its safe haven status should fear grow extreme, but there is a lot of ground to lose before that extreme is reached.

The Friday NFPs and Fed’s preferred inflation figures (PCE deflator) would be more effective Dollar boosters on the back of rate expectations without triggering the shock that an actual move would entail. That said, we don’t need to rely on the Fed itself to stir the risk pot. There are more than a few points of tension already rising in the global markets. The USD/CNH’s climb to record highs is putting the spotlight on China’s financial stability and strategy. Monetary policy is losing traction and central banks are making moves that look like slow capitulation. And, the US Election countdown is clearly amplifying the headlines. That same, unusual Dollar-sentiment dynamic can play out.

Though there are a lot of direct fundamental sparks to move the Dollar in the week ahead, we should still keep sight of the crosswinds. Much of the Greenback’s movements these past weeks have come on the basis of weakening counterparts. Motivated counter currencies can keep the pressure – bullish or bearish – on the Dollar moving forward. Themes of Brexit, China devaluation, faltering Eurozone stability and BoJ capitulation stand ready to move the needle.
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Fundamental Forecast for Euro: Neutral

- Euro rally built on US Dollar weakness, improved Euro-Zone data translating into higher yields.

- Markets may be thinking ECB is behind the curve after recent data surprises.

The Euro had quite a strong week on approach to the end of October, finishing higher against all of the major currencies covered by DailyFX Research. EUR/USD’s gains could be considered modest (+0.92%), relative to the performances by EUR/JPY (+1.81%), EUR/CAD (+1.41%), and EUR/GBP (+1.32%). Whereas EUR/USD weakness arrived late in the week on the back of headlines pertaining to the US Presidential election, Euro strength, generally speaking, was evident for most of the week as it appears markets are casting doubt on the European Central Bank’s dovish outlook.

Whereas the initial Euro rally after the ECB’s October policy meeting was quelled, thanks in large part to ECB President Mario Draghi himself outlining the path to a shift in the QE program in December, last week’s gains reflect a mindset that the market may believe the ECB is falling behind the curve. A look at the recent rise in the German Bund 10-year yield illustrates this point, having gained +32.8-bps in recent weeks to 0.167% by market close on Friday.

Supporting the recent rise in European yields (reflecting credit weakness and/or discounting future ECB policies) has been a sharp jump higher in economic data trackers during the month of October. Analysts and economists, riding the coattails of the ECB’s policy forecasts, may have been too pessimistic in their expectations for data: the Citi Economic Surprise Index for the Euro-Zone jumped to +43.5 on October 28 from a mere +2.6 on September 30.

Concurrently, with data generally perking up more than anticipated, Euro-Zone inflation expectations have run to their highest level since June 1. 5-year, 5-year inflation swaps now yield 1.477%, up sharply during the last month from +1.355% on September 30. It bears mentioning that this medium-term market gauge of inflation is still well-below the ECB’s medium-term target of +2%, but the recent rise may be due to incoming base effects thanks to energy prices.

Consider where Brent Oil (priced in US Dollars) closed on Friday: $49.71/brl. It is up +1.4% from one-year earlier, when it traded at $49.05/brl. Now consider where Brent Oil traded on the first day of 2016: $27.10/brl; year-to-date, Brent Oil has risen by +83.4%. Even if energy prices moderate over the next several weeks, there is still a very high likelihood that they will be a tailwind for CPI reports through at least the end of the year; there will be a strong “base effect” impact.

Reflexively, however, now that yields in Europe are rising, they may actually give the ECB the breathing room it needs to conduct its bond buying program more effectively through its March 2017 run period

What will likely happen: at an upcoming meeting, the ECB will indicate that it needs to adjust the way its bond buying program is conducted. To remove ‘taper tantrum’ concerns, the ECB needs to either: remove the limiting parameter of -0.40% on its bond buying; or discard the capital key variable. In the first case, short-term German yields would like move lower the fastest; in the second, short-term peripheral yields like in Italy and in Spain.

Still, with headline inflation well below the ECB’s medium-term target – the October CPI report on Monday this week should show as much, with the headline due at +0.5% y/y and the core headline at +0.8% y/y – it seems more likely than not that in the event of the changes to the QE program being made in December, it is likely that an extension of the program is announced. If the deposit threshold and capital key are kept in place as the limiting parameters to the QE program, at this point then it’s possible some tapering built in. With Euro-Zone growth still meandering around – Q3’16 GDP is due out at +1.6% annualized on Monday alongside the CPI report – it may be that the market is getting ahead of itself in the short-term, not that the ECB is getting behind the curve in the long-term.
  • Dollar Technical Strategy: Pullback from March High Puts Focus On Corrective Channel
  • One and Done View Puts Focus On DXY Strength Outside of US
  • Options Market Awaiting USD Downside, EUR upside
The market is wildly optimistic about a Federal Reserve rate hike at the December 14 policy meeting. The meeting standing between today and December 14 takes place this Wednesday, and its proximity to the U.S. Presidential Elections as well as the lack of a post-FOMC press conference has traders looking past this meeting to get to the next.

As we wind down 2016 FOMC meetings, traders are likely to see any hike met with rather dovish language as we head into 2017. The infamous ‘dot plot’ currently has a wide spread of 150bps. However, the most recent dissenters that anticipated the need to hike at the last Fed meeting will not be voting in 2017. The dissenters who were relatively hawkish will be replaced with perceivably more dovish members like Neel Kashkari, ‎President/CEO Federal Reserve Bank of Minneapolis, Charles Evans, Chicago Fed President and Robert Kaplan of the Dallas Federal Reserve Bank President/CEO.

The impending shift to a more dovish set of voting Fed members in 2017 aligns with a development in the options market. Per Bloomberg, for the first time since May, EUR/USD calls are trading at a premium to puts as 1M risk-reversals have flipped positive. Additionally, the March 01 closing low of 1.0865 appears to be strong support for EUR/USD given the price action last week that resulted in a sharp move higher toward 1.1000.

[Image: vhz1Ab]

The chart above shows the sharp ascent of DXY from mid-September. There are two trend following indicators worth watching on this chart, Andrew’s Pitchfork & the H4 Ichimoku Cloud. When the price is trading above the Ichimoku Cloud that shows that the path of least resistance is higher. You can see that price is putting pressure on the Cloud and breakdown from this level could easily open up a larger move toward the 38.2% retracement of the September-October zone at 97.50.

Andrew’s Pitchfork also does a fine job of framing price action, and a break of the channel would also result in a break of the Ichimoku cloud, which would turn the bias Bearish.

The price channel that DXY has carved out gives us a helpful road map to wait for a bullish reversal. The series of lower lows and lower highs should be watched, because if the price is unable to break the lower-highs at 98.69 and 99.01, there is little reason to fight the trend.

As noted above, there could be a fundamental shift developing with Fed voting members after the “priced-in” hike in December and the options market is now favoring more DXY weakness than that of the largest counterpart in the DXY, the EUR.

Shorter-Term DXY Technical Levels for Monday, October 31, 2016

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

[Image: SvSsiy]
  • Crude Oil Technical Strategy: Ichimoku, Trendline & Key Fibonacci Support Being Tested
  • CoT data shows an unwind could bring a strong drop
  • Crude Oil at 4-week lows shows doubt on OPEC deal
The market has clearly begun to price in the failure of an OPEC deal to cut production as evidenced by a ~11% drop in nine trading days. News hit the wires on Tuesday that Nigeria and Libya, who recently requested an exemption from the OPEC production cut was increasing supply, which put further doubt on the potential of a deal to be struck when OPEC formally meets in Vienna on November 30.

A key variable that will be watched going through the month of November is the amount of output brought to the market. October was fueled with multiple inventory draws of aggregate supply, which was encouraging when the OPEC deal seemed secure. Now, as doubts grow if a deal will be reached and a further increase in output will further pressure the price of Oil in fear of a renewed supply glut.

A valid concern is the relative number of bulls as seen in the recent CoT report that shows the difference between net speculative positioning and net commercial positioning measured is at 98% of the 52-week percentile, and US Dollar is at 100% of the 52-week percentile. This relative extreme doesn’t imply a top but can be indicative that there could be a significant unwind if disappointing data emerges such as a failed OPEC deal.

[Image: 1bmrwj]

Crude Oil has retraced 61.8% of its rally from mid-September that started at $42.72/bbl and went as high as $51.92/bbl in mid-October on DoE inventory data after the OPEC deal seemed a lock-in. A 61.8% retracement is still acceptable in an uptrend, and you can see above that we’re above the trendline drawn from the February low and connected off the July & September low, but not by much. In addition to the Trendline, you’ll notice that the price is also sitting on the Ichimoku Cloud on the daily chart where we bounced aggressively from last time.

If the price breaks below this zone of support that is comprised of the Trendline drawn from February and Ichimoku cloud, we will likely see a much deeper correction. We mentioned the stretched relative positioning as explained in the CoT note, and a breakdown of these technical support points could provide a wave of selling pressure that drops price closer to $40/bbl.

We recently shared in a previous note that we would wait to turn Bullish until we observed a break above structural resistance of the presumed-corrective moves lower at $50 and $51. Until the break of resistance surfaces, we’ll be anticipating a move down toward $47.12/bbl. The burden of proof is now on the Bulls, and we’ll continue to doubt their arguments if the price of Oil to fails surpass $50-51/bbl before anticipating new 15-month highs anytime soon.

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