At a time when stocks are hitting highs, oil prices have been cut in half. Relative to past prices, it is tempting to call oil “cheap” and buy it. Indeed, there are many bullish calls by analysts to do just that. I receive a very large number of emails, and investors are showing a high interest in buying oil ETFs here for the long-term. Let us first try to answer a very simple question, “Will oil go to $33 to $75?”
To answer, please take a look at these two charts.
Please click here for an annotated chart of oil price and U. S. shale production.
Please click here for an annotated chart of world liquid fuels production and consumption balance.
Let us examine both the technicals and fundamentals at this time.
Technicals
Based on oil’s current trading pattern, from a medium- to long-term perspective, traditional technical indicators in the categories of momentum, trend, volatility and volume are not only useless, but they are also likely to mislead investors into making wrong decisions.
There is some merit to looking at Fibonacci extensions. These extensions are shown on the chart. The chart is of NYMEX West Texas Intermediate crude-oil continuous contract. For trading purposes, the symbol is CLU5.
Fibonacci extensions show downside potential to $33 and upside potential to $75….Read more at MarketWatch
You are receiving less than 2% of the content from our paid services …TO RECEIVE REMAINING 98%, TAKE A FREE TRIAL TO PAID SERVICES.
Please click here to take advantage of a FREE 30 day trial.
Check out our enviable performance in both bull and bear markets.
