Inside the Currency Market: US Oil, WTI

Moving averages 30, 25 and 20 year crossed below the 15, 10, 5, 2 and 1 year averages. The current price at 45.03 trades comfortably between the 30 and 25 year averages from 42.78 – 47.37. Comfortably because current price in relation to the 30, 25 and 20 year averages are neither overbought nor oversold. A price move up or down won’t affect the MA numbers in any significant manner. Price above the 30 year average at 42.78 reveals an upward trend just beginning while price below the 25 and 20 year average at 54.14 reveals a downtrend just underway. If price breaks the 30 year average at 42.78 then price will remain below every average from 1 year to 30.

Two factors dictate current WTI prices, the 5 year average and significant tops. The 5 year average is the highest average among its counterparts at 88.98. This average prevents downside and sustainable moves because price becomes severely oversold. The current average at writing remains severely oversold. Extreme oversold begins at 41.13 while its absolute bottom is found at 33.15. While WTI made its downside move, the 5 year average remained out of sync in relation to the larger price drop. Price dropped while the average remained constant. Further, a significant and out of bounds Peak is seen in the 5 year average to further highlight the importance and out of sync nature of the 5 year average. Yet the entire 30 year distribution reveals a significant Peak as well as the the 25 and 10 year average. This revelation says we are in sell rally mode

Price at 45.03 trades directly between EUR/USD at 1.1184 and DXY at 96.15, Oil trades between GBP/USD and DXY, Trades between AUD and DXY, CHF and DXY, NZD and DXY, JPY and DXY, CAD and DXY, The list goes on. Oil is a perfect candidate for the Correlation trade previously mentioned because oil is a currency with a different name.

Two most important points to the downside are found at 31.69 and 27.25 followed by distributional breaks at 36.88,32.48, 41.13, 33.15. Other points on the way down, 41.96, 41.69, 40.33, 39.99, 38.57, 36.82, 36.38, 34.14, 31.86, 31.69, 31.56, 31.44, 26.37.

Upside points include 47.37, 54.14, 53.07, 53.42, 56.03, 57.85, 59.18, 64.47. What is vital to reported points they represent vital distributional changes. Price will gain speed up or down upon breaks.

Why points because ranges are found between 9.12 – 33.07, 19.44 – 46.60, 23.46 – 68.32, 20.84 – 53.42, 26.37 – 68.26.

Brian Twomey, Inside the Currency Market, btwomey.com

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