WTI oil has surged amid rising tensions in the Middle East and the conflict involving the US and Israel with Iran. One trend in WTI oil prices is a steady rise, with the 10-day exponential moving average serving as support and the upper Bollinger Band as resistance. Additionally, previous levels that served as strong resistance or support continue to act as such.
Although oil prices have declined by nearly 5% in early trading on 16 March, the price remains above a support level near $94 to $94.50, which has acted as both support and resistance since October 2022. A fall below $94 would signal a potential test of the 10-day exponential moving average, which has held firmly since the commodities breakout.
The more significant test of oil’s strong rally will occur at the 10-day exponential moving average, a level it has not traded below since mid-February. More importantly, the 10-day exponential average intersects with a support level around $87.75 from April 2024. A break below that support and the moving average would likely lead to a retest of the simple 20-day moving average at $76.70, which would place oil in the middle of the upper and lower Bollinger Bands.
Implied volatility levels for oil, as measured by the CBOE Crude Oil Volatility Index (OVX), have surged above 100. In the past, during periods of market stress and geopolitical tension, oil prices have risen sharply alongside implied volatility, such as in early 2022 when Russia invaded Ukraine. If implied volatility begins to fall, it could suggest that some of the initial jitters are starting to fade. While this does not necessarily mean that oil prices will drop, it might indicate that oil is settling into a trend characterised by smaller price fluctuations.
Written by Michael J. Kramer, founder of Mott Capital Management.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
Although oil prices have declined by nearly 5% in early trading on 16 March, the price remains above a support level near $94 to $94.50, which has acted as both support and resistance since October 2022. A fall below $94 would signal a potential test of the 10-day exponential moving average, which has held firmly since the commodities breakout.
The more significant test of oil’s strong rally will occur at the 10-day exponential moving average, a level it has not traded below since mid-February. More importantly, the 10-day exponential average intersects with a support level around $87.75 from April 2024. A break below that support and the moving average would likely lead to a retest of the simple 20-day moving average at $76.70, which would place oil in the middle of the upper and lower Bollinger Bands.
Implied volatility levels for oil, as measured by the CBOE Crude Oil Volatility Index (OVX), have surged above 100. In the past, during periods of market stress and geopolitical tension, oil prices have risen sharply alongside implied volatility, such as in early 2022 when Russia invaded Ukraine. If implied volatility begins to fall, it could suggest that some of the initial jitters are starting to fade. While this does not necessarily mean that oil prices will drop, it might indicate that oil is settling into a trend characterised by smaller price fluctuations.
Written by Michael J. Kramer, founder of Mott Capital Management.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
Penafian
Maklumat dan penerbitan adalah tidak bertujuan, dan tidak membentuk, nasihat atau cadangan kewangan, pelaburan, dagangan atau jenis lain yang diberikan atau disahkan oleh TradingView. Baca lebih dalam Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak bertujuan, dan tidak membentuk, nasihat atau cadangan kewangan, pelaburan, dagangan atau jenis lain yang diberikan atau disahkan oleh TradingView. Baca lebih dalam Terma Penggunaan.