Oil: Here comes the whipsaw – TDS

A deterioration in downtrend signals on the horizon is expected. It can spark significant buying activity in WTI and Brent crudes over the coming sessions, as algos are forced to reaccumulate their recently liquidated length, TDS senior commodity strategist Daniel Ghali notes.

Buying activity in WTI and Brent crudes is due

“After all, our advanced positioning analytics have been highlighting that CTAs were likely to reaccumulate their length, even in a flat tape, which points to a natural deterioration in downtrend signals associated with moving windows.”

“Prices will need to remain on a downtrend only to keep algos from returning to the bid — which creates a set-up for a near-term reversal in prices. At the same time, our real-time gauge of commodity demand trends has finally sufficiently deteriorated towards oversold levels, suggesting that the reversal in demand sentiment may be overdone.”

“This week's Politburo meeting still presents a potential catalyst for a reversal in sentiment with a potential announcement of policy details designed to stimulate domestic demand following the Third Plenum.”