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Forego The Temptation Of Betting On Crude This Week

I don’t wish to boast (who am I kidding, of course I do), but in these pages I suggested that oil would move up around three weeks ago and then, last week, that it would turn and drop lower. The twenty day chart below shows why mentioning that might be considered bragging.

(Click to enlarge)

In the light of that, and given that I am obviously hotter than Kim Kardashian right now, I would love to use this week’s ramblings to give a definitive call on the next move in oil. Unfortunately, though, I have no idea where it goes from here, at least in the short term. That is not something that you will hear a columnist and pundit say very often, but it is something you will frequently hear in dealing rooms around the world.

When I was being trained for my career on a trading desk we were encouraged to admit when we had no clue as to what the next move would be. To do so was not considered a weakness, but a strength. It stopped traders taking positions for the sake of it, based entirely on guess work. Positions should be the result of a consideration of fundamental and technical factors and when those factors contain reasons to buy and equal reasons to sell, as is the case right now, square is the best position to have.

(Click to enlarge)

The same chart as above with a few squiggles added indicates why technical analysis tells us little here. The drop from the high a week or so ago was classic in a couple of ways. Firstly it…

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