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Two Leading Indicators for Crude Oil Point To Higher Prices

On Friday morning I created these charts on the price of crude oil, the energy sector stocks (XLU), and also the Canadian Dollar, which I think paint a clear picture of what to expect for the price of crude this coming week.

I always like to look at the leading indicators of the asset which I am interested in trading. For those trading the price of crude oil you should be watching what the energy stocks are doing or the sector as a whole. I use XLE ETF for this. I also will show you the Canadian dollar and what it is going later in this post.

Energy stocks are a way for traders to leverage the move in oil so the smart/big money tends to move into these stocks before the underlying commodity (oil) will start to change direction.

PRICE OF CRUDE OIL – DAILY CHART

Oil has been trading sideways for a couple of weeks. The range may not look big but just note that it’s a roughly 25% range from the bottom to the top of the blue box. The key take-aways here is simple. Oil is still trading at the bottom of the chart and trading sideways. What we will be looking for is a breakout of this zone in either direction which should induce a strong rally or selloff to the expected price levels of $34, or $14. These moves are likely to happen quickly over a 2-3 day period to expect an explosive move.

PRICE OF ENERGY SECTOR STOCKS ETF (XLE) – DAILY CHART

Energy stock generally leads to the price of oil by a few days. The important points on this chart are that price has rallied off the lows, and is forming a bull flag pattern which means higher prices are expected.

Much like crude, a break in either direction in XLE can be traded, but the pattern which has formed puts the odds in favor of an upside breakout and rally of roughly 12%.

Before we continue, be sure to opt-in to our free market trend signals 
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PRICE OF CANADIAN DOLLAR – DAILY CHART

The Canadian dollar is very tied to the energy sector, both the price of oil and energy stock because we are a resource-rich country, with oil being once of our top resources.

As you can see in the chart below the Canadian dollar it too has formed a bull flag pattern and looked primed and ready for another rally higher. The currency market, in general, is massive and when a large asset class is showing signs of reversing you better pay attention.

When I see a currency forming strong pattern to give us an expected price breakout direction, I like to look at what that is telling me. What companies or commodities will this move affect? In this case, money is moving into the Canadian dollar expecting oil to bottom and rally which should help increase the value even more.

I TALK LIVE ON TV ABOUT THESE TRADE SETUPS

If you want more details on this trade setup just watch this clip from TraderTV where I talked with Brendan Wickens in detail. Click Here To Watch Video

CONCLUDING THOUGHTS:

In short, this coming week is most likely going to be much wilder than last week. While I didn’t cover on the other asset classes just know that precious metals, the major stock indexes, bonds, and oil have al built powerful patterns. Breakouts of these patterns will trigger big moves 10-25% in some cases, so get ready for fireworks this week!

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for short-term swing traders.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts visit my Active ETF Trading Newsletter.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

Metals And VIX Are Set To Launch Dramatically Higher

The recent rotation in the US stock market and US major indexes have set up a very interesting pattern in the Metals and VIX charts.  Our researchers believe precious metals, Gold and Silver, are setting up a new momentum base/bottom and are beginning an early stage bullish price rally that may surprise many traders.  If you have not been following our research, please take a minute to read these past research posts :

September 24, 2019: IS SILVER ABOUT TO BECOME THE SUPER-HERO OF PRECIOUS METALS?

September 19, 2019: PRECIOUS METALS SETTING UP ANOTHER MOMENTUM BASE/BOTTOM

Our researchers believe the bottom in Metals has already set up on October 1, 2019.  This setup aligns with our earlier analysis that a new bullish price leg is setting up that will propel Gold to levels above $1600 before the end of November – possibly resulting in a rally that attempts to breach the $1700 price level.

DAILY GOLD CHART

Of course, for Gold to rally in this manner, some type of extended fear must enter the global markets.  We believe this fear could become known to traders within 3 to 10+ days based on our understanding of the schedules and calendars available within the news cycle.  The US/China trade talks appear to be breaking down again.  News that one of India’s largest banks is in the process of collapsing hit last weekend. And news that the US political parties are about to ramp up nearly all levels of activity ahead of the 2020 US Presidential election cycle is sure to throw the markets a few curve-balls.

As skilled technical traders, there are times when we must understand how the news cycles and external events can have dramatic impact on prices and trends in the financial markets.  These are times when we must protect our assets by deploying very skilled trades, proper position sizing and become even more skilled at understanding the global stock market dynamics.

DAILY SILVER CHART

Silver, or as we have termed it “The Super-HERO of Metals”, will likely move much higher, even faster than Gold.  If our research is correct, the next upside price leg in Metals will see Silver rally to levels well above $20, then stall briefly, then begin a move to levels above $26 (or higher).  The Gold to Silver ratio will likely fall to levels near 65 throughout this move.  That would mean that Silver would appreciate about 11% to 15% faster than Gold will appreciate over the next 60 to 90+ days.

VIX – DAILY VOLATILITY INDEX CHART

And finally, the VIX.  At this point, our research team believes a broader downside price rotation has already begun to set up in the US stock market (with Technology and “unicorn” sectors at severe risk) which may prompt a move in prices to retest the December 2018 lows.  This is why we believe the VIX is very likely to begin an upside price move over the next 30 to 60+ days and attempt to break above the 26 to 27 level as the US stock market reacts to increased fear and uncertainty.  This is, obviously, also why we believe Gold and Silver will begin to move dramatically higher very quickly.

September 17, 2019: VIX TO BEGIN A NEW UPTREND AND WHAT IT MEANS

CONCLUDING THOUGHTS:

Our researchers are attempting to follow all the news and price activity we can handle over the past 4+ weeks or longer.  At this point, it seems all the global markets are unstable in terms of price trends, extended volatility, and uncertainty.  We believe our expectations within the metals markets, us stock market and the VIX predictions are relatively saved expectations given the research we’ve completed.

It would be wise for skilled traders to prepare for a moderate to deep price correction at this point.  Price has failed to move higher above historic all-time high price levels and has begun to move lower.  Unless some extremely positive news, event or outcome is reached within the next 90+ days, it is very likely that price will continue to rotate within established ranges attempting to identify true support levels.  This ride could become very volatile – very quickly.

As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

Be sure to ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. My simple technical trading strategy using ETFs will allow you to follow the markets closely and trade with it so you never get caught on the wrong side of the market with big losses.

Chris Vermeulen
www.TheTechnicalTraders.com

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.  Our research team produces these research articles to share information with our followers/readers in an effort to try to keep you well informed.  Visit our web site to learn how to take advantage of our members-only research and trading signals.