As noted last week, the maturing of the Balance Phase, 86s-89.50s, continued to develop an inventory imbalance as the market began the week coiling, 88s-89.50s.
This Balance developed following the Stopping Point at/near 86s (Nov-Dec 2012 Major Structural Support). The failure of the sellside to drive the market below 88s was a key clue to the pending inventory imbalance/breakout potential .
Following the coil at/near the Balance Area High, 89.50s, the market encountered the upside breakout & buyside directional phase midweek. The low usage area visible here above the Balance Area High, 89.50s, indicated the high probability of price discovery back into the Overhead Supply Cluster, 92s-94.50s, as the auction mechanism fills in such low usage. This Structural Development superseded Statistical Projections as the market traded to the Weekly 2nd Std Dev High, 90.03s, ultimately greatly exceeding it. The market rallied into the Overhead Supply Cluster toward 94s before closing the week at/near 93s.
Next week’s response in the Upper Cluster, 93.90s-92.60s, will be of focus early in the week. IF this cluster holds as support, price discovery potential higher toward Major Structural Resistance overhead, 97s. IF this cluster holds as resistance, price discovery lower (filling in last week’s distribution) toward 91s/89s.
- Flash Crash Of 2010: 4.28 v 05.05. (Nanex)
Supply/Demand & Markets
- Oil’s Big Five: Earnings Squeezed By Crude Decline As CapEx Rises. (Bloomberg)
As of 730 CST,
the market has auctioned lower from Thu Settlement, 93.64s, balancing within Thu’s upper cluster, 92.70-93.90s.
Response within this Balance will be of focus into today’s Pit session.