Ichimoku Analysis on Light Sweet Crude Oil

Ichimoku Analysis: Where is the oil price heading?

Oil price has been in the news since its peak in Aug 2014. It is now 70% fall from its high then. Where will it be heading? Some said it will be trading below USD 30 per barrel before making a rebound back to the USD 60 per barrel level. Some said it will be hitting USD 20 per barrel and will be consolidating in that range for a long period time. What we like to do is to apply ichimoku analysis on the crude oil price to determine how a trader would like to trade on the light sweet crude oil.

We shall use the weekly chart of the light sweet crude oil first and shall follow with a daily chart to have a more detail on the price level and time target.

Weekly Oil Price using Ichimoku Analysis

Weekly Oil Price using Ichimoku Analysis

From the weekly chart, we can see that the oil price accelerated its fall from time in Sep 2014 to January 2015. The very concerning part from the ichimoku analysis is the cloud (kumo). The cloud was not thick initially. However, the cloud thickness increased gradually over time. The price action is currently trading much lower than the cloud low. The bullish traders have a lot to overcome to reach the cloud low, not to say to penetrate through the cloud high.

From the weekly oil price chart, with ichimoku analysis, the price target level is around USD 20 per barrel, some time from 20-Feb-2016.

Daily oil price using ichimoku analysis

Daily oil price using ichimoku analysis

The chart above is the daily crude oil price chart.

Using the ichimoku analysis, the price level of the crude oil will be much lower than the weekly price chart, at USD 15 per barrel, some time during 07-March-2016. Trader can aim to take short position between tenkan-sen and kijun-sen level, and with a stop loss level at a range comfortable to yourself at above the kijun-sen level. The price action has not traded above the kijun-sen level since November 2015 as it fell below the cloud.

The above ichimoku analysis is strictly for reference purpose. If you find it useful, do share it. If not, just have a laugh.

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