JICPT| Crude oil testing key z on China's Delta spread
Hello everyone. Crude oil dropped by more than 2% on worries of delta spread in China. It all started from an airport of Nan Jing a couple of days ago, and then the delta variant quickly spread to over 20 cities. Today, the new cases are above one hundred. It meant a sever situation as China adopt zero-tolerance policy towards the virus.
So, How the situation in China impact the crude oil prices?
Firstly, China is the world’s biggest importer of oil. Data showed that China imported less oil in July than in June. The spread of the virus spooked investor's concern on the demand. I recalled the OPEC plus, a group of 23 nations led by Saudi Arabia and including Russia, will increase output each month by 400,000 barrels a day, beginning in August. The deal was reached on July 18th, it also triggered a wave of sell, pushing oil down by about 10% then. Now, with potential decreased demand, and confirmed increased supply, bearish on crude oil seems to be right.
Secondly, there're other economic indicators that suggested China is slowing down, e.g. PMI,M2. So, one more point on the bearish side.
Technically, the drop-base-rally demand zone on the daily seems to be strong, with flip and long-term moving average. To go further down, price is likely to go sideways for a while before taking out the zone of 65.22-66.69. On the weekly though, there seems to be very strong demand zone. Fundamental contradicts with technical analysis.
So what to do?
To make it simple, I plan to look for short opportunities after the zone is violated.I already set an alert at the bottom of the zone. It would be a short swing. It takes time for weekly chart to terminate bullish patterns and form bearish structures.
If the zone holds well, oil will go up to challenge $72.
Give me a like if you're with me.
So, How the situation in China impact the crude oil prices?
Firstly, China is the world’s biggest importer of oil. Data showed that China imported less oil in July than in June. The spread of the virus spooked investor's concern on the demand. I recalled the OPEC plus, a group of 23 nations led by Saudi Arabia and including Russia, will increase output each month by 400,000 barrels a day, beginning in August. The deal was reached on July 18th, it also triggered a wave of sell, pushing oil down by about 10% then. Now, with potential decreased demand, and confirmed increased supply, bearish on crude oil seems to be right.
Secondly, there're other economic indicators that suggested China is slowing down, e.g. PMI,M2. So, one more point on the bearish side.
Technically, the drop-base-rally demand zone on the daily seems to be strong, with flip and long-term moving average. To go further down, price is likely to go sideways for a while before taking out the zone of 65.22-66.69. On the weekly though, there seems to be very strong demand zone. Fundamental contradicts with technical analysis.
So what to do?
To make it simple, I plan to look for short opportunities after the zone is violated.I already set an alert at the bottom of the zone. It would be a short swing. It takes time for weekly chart to terminate bullish patterns and form bearish structures.
If the zone holds well, oil will go up to challenge $72.
Give me a like if you're with me.
Comment:
The zone held very well.
plan your trade and trade your plan
