Monday, March 30, 2015

Oil Price Down when will it go up again?

Despite of the fact oil is one of the highest value of commodity being used in everyday of human life - still it is not an exception to escape from the fluctuation cycle. Just like any other cycle either it is economic cycle, currency values, interest rates, etc Oil is now facing one of the significant downtime after 6 years floating at average of USD $110 per barrel.

As war raging in the Middle East and surplus of supply the Oil Prices has gone down almost to it's fundamental support level at $45. This downturn certainly has a lot of impact towards companies that depending solely on Oil Based business as investors and prospectors expecting it will keeps going down. Technically based on the MACD and Stochastic indicators there is a strong tendency that it will bounce back within a couple of weeks time. This is based on the technical indicators from the weekly time frame and also the fact that it has already reach the ideal support level to where it should fall. Having said that we also must be aware of any economical situation that might press the price further down to oversold positions.

In the long-term the bearish trend is still very much intact based on the MACD and Stochastic indicators which still synchronize downwards. But having the price already reach the bottom historical price - technical indicators could becoming less important to look at although it is still necessary. The chart below shows MACD and Stochastic in the monthly time frame synced downwards which indicate strong bearish trend but at the same time it also hit the previous price level which may trigger quick reversal uptrend.

However the volatility of the prices won't help companies to recover very fast - as setting up projects and so on won't take as easy as oil prices fluctuation. It may takes month and years to build something but it can crumble apart in matter of months or weeks due to this downturn.

No comments:

Popular Posts