Categorized | DailyFX, Technicals

Crude Oil to Bounce as Risky Assets Pare Losses

Posted on 12 August 2010 by DailyFX

Crude Oil (WTI) – $77.28 // -$0.74 // -0.95%

Commentary: Crude is increasingly tracking overall risk sentiment with the correlation between prices for the WTI contract and the MSCI World Stock Index now at 0.74, the highest in nearly three weeks, on 20-day percent change studies. This hints that a rebound may be ahead in the near term with US equity index futures now in essentially flat having recovered from deep losses (0.8 and 1.1 percent on the Dow Jones and S&P 500, respectively) in early Asian trade. The economic calendar offers little that stands in the way of the correction, with weekly US jobless claims numbers expected to print lower and seemingly nothing of particular note on the earnings calendar.

Technical Outlook: Prices have declined to meet support at the bottom of a rising channel set from the low in May. A break lower exposes the 38.2% Fibonacci retracement of the 5/20-8/4 rally at $75.82.

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This analysis is republished with permission from DailyFX, your source for daily forex market news and analysis. DailyFX is part of Forex Capital Markets.

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