The just released Crude Oil Inventories is just the right thing that OPEC and other oil producing countries want to hear. Estimates were easily surpassed with crude oil deficit increasing to 6.1 million barrels from an estimated 2.5 million barrels reduction in stockpiles. Well, this should be the case and a reprieve for oil dependent economies that have gone on their way to stabilize world crude oil prices by even extending oil production cuts by another 9 months. Though reduction remains at 1.8 million barrels a day, it was not received well and oil prices shrunk 2% upon the release of the supposed good news. The US in particular dampened the news further saying that despite all the effort on cutting production, oil glut will continue. The AUD on the other hand continued to trend lower as the Caixin manufacturing activity in china continued to slide and this should impact iron core prices which Australia is a leading exporter. Continued downside risks for the Chinese economy should have a negative contagion effect on Australia and the Aussie in this case. Related news also shows that Chinese oil contracting companies are back in the market after a yearlong absence. This should be a hint as the IEA are already forecasting an increase in crude oil demand in china to grow by 400K bpd.
On the monthly charts, there is a shift of gear as prices trend lower and the CAD continues to strengthen. Bear momentum is on and zooming to the daily chart, you can see that there is a break below the support trend line. If price continues lower, the ideal stop loss will be at the recent resistance at 1.007 and a ideal take profit at support-0.96
Trade with a 1:3 risk reward ratio is ideal. An option of fine tuning entry tomorrow in the 30 min chart is also possibility in case you want a perfect short entry tomorrow.
Sell limit: 0.998-1.00
Stop Loss: 1.006
Take Profit: 1:3 risk-reward depending on your point of sale.
This trade will be nullified should the stop loss hit and a strong bullish engulfing candlestick formed.
Let me know your thoughts.