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E-Mini Crude Oil Futures Volatility Forecast (07/11/2010)

The higher prices experienced by the crude oil are obviously driven by the performance that the US dollar registered lately.

Seasonally speaking the crude oil should decline rather than going up but, apparently, we are still in an uncertain situation. The staff of HyperVolatility remains bearish on Crude Oil for 3 resasons:

1) The rally which brought the Crude to $ 87 does not have the necessary fundamentals to justify such a price and it was obviously caused by the QE2 announcement which “manipulated” the value of the dollar

2) The last rally comes after a sideways movement of the market signalling that the last uptrend is the result of external forces

3) Volatility is increasing and so will do in the upcoming week  because it kept dropping since June. In fact, we went from readings around 28% to 11% in a fairly short period of time and it is reasonable to believe that an “adjustment is needed”

The staff of HyperVolatility remains bearish on the crude oil and therefore suggests to watch out your long positions.

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