Crude Oil in trouble
For Crude everything started with the bearish engulfing bar on 4 October. Fundamentals weighed in on the price with heavy pressure from the sellers. On Sunday Iranian sanctions are going to take an effect so we are going to see an interesting opening for WTI on Monday. I personally think that the market has already priced in the effects, bringing down the price below $70 pb. Selling has been heavy indeed as the price quickly found its way below the 50 SMA, the first channel line of the uptrend, under 61.8 Fibo and under the 200 SMA. DeMarker also formed a selling signal around the time the engulfing bar was formed.
First scenario: Price opens with a gap down and depending on how fast it is covered and how much we will have a confirmation that we can begin to short the Crude with a stop loss at $72. In this scenario, the price will go down towards the 200 SMA where we will need to see a final breach and test to confirm that the instrument is going into a Bear market.
Second scenario: Everything has been priced in already, the sanctions are not a surprise and Oil goes up with a gap on Monday. Price is stabilising for a move up where the market will form a balance between supply and demand and our idea of shorting the commodity will break down.