WTI and Bloomberg Commodity Index
I posted this on the chat on Sunday but forgot click on send via Email button, so here
Oil looked like we might bottom when OPEC+ cut production. And we gapped up mentioned in the note "Ignoring Tailwinds 7th April 2023."
"With a slower economy thesis, price hikes will likely be supply-driven constraints.
When is this analysis falls apart? If the gap is filled in an impulse drop or price gap down next week."
Money managers' WTI net-long position, or the difference between bearish and bullish bets, dropped to 157,047 contracts in the week ended May 2, according to data released Friday by the U.S. Commodity Futures Trading Commission. The speculators' share of open interest, a measure of market participation, is near the lowest level in three years. Bloomberg
Chart 1: WTI daily
On Thursday, the prices fell abruptly, resulting in a long body, and the candlestick pattern formed a bullish Hammer. However, Friday's job numbers provided a positive push, creating a three-candle Morning Star reversal pattern. Thursday saw a sudden price drop, leading to a long body and a bullish Hammer candlestick pattern. The positive impact of Friday's job numbers resulted in a three-candle Morning Star reversal pattern.
I created a Point & Figure chart for WTI with a 2% box size and 5 box reversal. It has the making of a bull flag pattern. We should watch it for the next few weeks and observe whether it surpasses 78.00.
Chart 2: WTI/Gold (Second contract)
Thursday broke below support intraday and Open=Close (forming a bullish Dragon Fly Doji). Together with the 5.6% rally on Friday, it began an impulse wave to create a Morning Star reversal pattern. Prices regained the Monthly Pivot S2.
Both Charts suggest the liquidation was large Speculative Longs drove the prices lower during the week.
As long as Friday's open hold to the downside, further gains must be had.
Likely targets: WTI to monthly Pivot P at 78 areas. The WTI/Gold to test the Monthly Pivot P and June 2022 downtrend.
Large Speculative Logs are at the lowest level since July 201
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Chart 3: Bloomberg Commodity Index
The chart has a textbook Island reversal (and a bullish Hammer on Thursday. The chart is bullish for a text of June 2022 downtrend and stops at Friday's gap up.