6 reasons Crude Oil is lighting it up; USD/HUF along for the ride

After days of bullish news for Crude, WTI oil moved higher on 4 of the last 5 trading days. Let’s look at some of the bullish factors that are helping to push oil higher, starting from March 17^th:

The IEA said 3 million bpd from Russia could be shut down
Talks regarding a ceasefire between Russia and Ukraine broke down
In what seems to be a done deal last week, there still isn’t an agreement for Iran to return to the oil markets
Rumors swirling that Europe may ban oil imports
The head of the IEA said that the world may be facing the biggest supply shock in decades
After small builds were expected from the DOE and EIA, both reported large draws

How to start oil trading

As a result, of these headlines and stories, WTI Crude oil has been moving higher. Crude had been moving higher since the spring of 2020 in an orderly fashion. However, on February 28^th, price exploded higher as Russia invaded Ukraine, reaching a high of 129.42 on March 8^th. Price then pulled back to support on March 15^th near 93.56. Since then, Crude has been moving aggressively higher once again due to the factors mentioned above. Today price stalled at 115.37, just below resistance at the 61.8% Fibonacci retracement level from the highs of March 8^th to the lows of March 15^th at 115.70. Above there is horizontal resistance at 117.17, ahead of the recent highs at 129.42. Support is at Tuesday’s low of 107.12, then horizontal support at 103.82.

Source: Tradingview, Stone X

Trade WTI Crude Oil now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

The National Bank of Hungary increased interest rates by 100bps to 4.4% on Tuesday, the largest rate hike since 2008, as high oil costs and worries about the war have increased inflation. However, it had little effect on the Hungarian Forint. USD/HUF has a high positive correlation with Crude oil. This has been driving the direction of the pair over the last month. The current correlation coefficient between WTI Crude Oil and USD/HUF is +0.85. Any readings above +0.80 are considered strong correlations. When Russia invaded Ukraine, USD/HUF moved higher with Crude oil. Both made tops on March 7^th, with USD/HUF making a high of 368.058. Both pulled back to support, with USD/HUF making a near-term low of 333.41 on March 17^th. However, since then, as Crude rallied to the 61.8% Fibonacci retracement level, USD/HUF got stuck at horizontal and trendline resistance. Correlation measures how often the 2 assets move in the same direction, not the magnitude of the move.

Source: Tradingview, Stone X

Trade USD/HUF now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

Resistance sits at the highs of March 18^th at 342.30. Above there is the 38.2% Fibonacci retracement level from the March 7^th highs to the March 17^th lows at 346.65, then the 50% retracement level from the same timeframe at 350.73. First support is at the March 17^th lows of 333.41, then horizontal support at 324.94.

Crude oil has been on fire lately. There is a strong positive correlation between the direction of WTI Crude Oil and USD/HUF, which means they move together in the same direction but not necessarily the same magnitude. Nevertheless, if Crude oil continues to move higher, so should USD/HUF. However, if the resistance holds in Crude Oil, USD/HUF could be down at new near-term lows in a hurry!

Learn more about forex trading opportunities.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.