Oil price analysis: the Trump effect
It was always likely the new US president would have an impact on any number of different markets and sectors, and it seems he is. Independent analyst Alistair Strang explains.
6th February 2025 07:37
by Alistair Strang from Trends and Targets
With the ascension of Mr Trump to the throne in America, we'd expected the price of crude oil to take an immediate hammering, something which has been absent thus far.
However, recent days have witnessed some weakening of the market, and now a fairly firm argument is taking shape pointing at reversal. But, as if sensing this, Mr Trump managed to toss a spanner into the Middle East works with his plan for Gaza.
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The markets appear a little stunned at the initiative. Who knows how it will all end but instead of rising substantially, the price of oil actually managed to weaken further.
The immediate situation for oil is fairly dodgy, suggesting weakness below $74 shall provoke reversals down to an initial $69 with our secondary, if broken, an eventual splashdown at a potential bottom of $60, a level at which the visuals favour a rebound.
There is however a greater risk should the $60 level break, where further drops are possible. Our issue comes from the salient detail anything below $50 will face sharp reversal to just $5. If this scenario breaks out, the tightest stop looks like $77.
The price of oil has nothing to suggest such a negative disaster is pending, but instead a "standard" reduction to the $60 level.
In the event the price of Brent somehow manages to exceed $77, our initial ambition works out at $88 with our secondary, if beaten, making a guest appearance at a fairly impressive $95. The visuals for such an event will confirm the stuff is essentially stuck in a trading zone between $95 and $69, a picture which has been quite repetitive since 2023.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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