• 348 days Will The ECB Continue To Hike Rates?
  • 349 days Forbes: Aramco Remains Largest Company In The Middle East
  • 350 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 750 days Could Crypto Overtake Traditional Investment?
  • 755 days Americans Still Quitting Jobs At Record Pace
  • 757 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 760 days Is The Dollar Too Strong?
  • 760 days Big Tech Disappoints Investors on Earnings Calls
  • 761 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 763 days China Is Quietly Trying To Distance Itself From Russia
  • 763 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 767 days Crypto Investors Won Big In 2021
  • 767 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 768 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 770 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 771 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 774 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 775 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 775 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 777 days Are NFTs About To Take Over Gaming?
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Crude Oil and the Dollar Test the Channels

The price of oil has once again captured the headlines, making a new high this week at $62.50/barrel as the latest wave of reflation hits the financial markets.

In last month's commentary entitled "Crude oil and the dollar test the curves," we examined the parabolic structures in the daily charts of crude oil and the U.S. dollar index, noting in particular that oil would likely test the $62-$64 area before encountering its next significant resistance. While that test has been a while in coming, we're now seeing it and as this article's headline suggests, the price of crude is about to test the upper boundary of its dominant interim uptrend channel.

What gives oil's latest run some upside impetus is the fact that the price of oil had to break out from a parabolic dome, shown in the daily chart above. Notice that the most recent peak from last month at $62.35 (intraday) was to the right-of-center of the dome pattern (see circled area). From the standpoint of parabolic analysis this meant that the dome was destined to be broken to the upside since the peak was beyond the "vertex" of the dome. Breakouts from parabolic domes typically carry price above the previous high, as we've already seen this week in the crude oil market.

The red channel lines shown in the daily chart mark the boundaries of the dominant interim uptrend channel and the upper channel line intersects at approximately the $64 area. As previously stated we'll likely witness an attempt at hitting $64 or slightly higher this month before the next oil price correction, based on momentum considerations.

Concerning the dollar, I mentioned last month that "the important thing to consider is that the upward momentum for the dollar is still there and hasn't dissipated yet." Well obviously some of that near-term momentum has since dissipated as the dollar shows weakness and looks like it may test the lower boundary of its uptrend channel at the 86.50-87.00 area. This is where the important 90-day moving average also intersects, coinciding with the lower channel boundary. Once this area is tested, it will tell us whether the dollar has seen its top for the year.

Back to homepage

Leave a comment

Leave a comment