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E-Mini Crude Oil Futures Volatility Forecast (31/10/2010)

The last week we highlighted the great reliability that the seasonality chart has when it comes to crude oil and so far the price continued to replicate the same patterns showed over the last 30 years. In fact, according to the seasonal chart the crude oil price is expected to raise until the end of October  and then collapse and the volatility chart is confirming such a pattern.

The TGARCH volatility plot does not display anymore a downward sloping curve and it is clearly visible that the up move is now losing strength and the current sideways trading is more probably a reversal sign rather than an accumulation period. In addition, if we include an extremely lower volatility level to our seasonal forecast it is not surprising to see a scenario which is statistically more oriented towards a price drop which could take the E-Mini Crude Oil Futures around $ 70 a barrel.

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