That’s a common behavior of the market during a bearish phase: bullish pullbacks tend to be furious and rapid, but they don’t last long and often end up with further liquidations.
The safest strategy in such conditions is to step aside the US assets and focus more on cross currency pairs, or Gold. The latter had already reached the new peak, so that might not be the best instrument to buy. In this review, we will focus on Crude oil and EURGBP (as a cross currency pair)
US Crude Oil
Crude oil had initiated a classical short coverage rally: despite a big bullish day, around 2% (42699 contracts on Nymex) of total open interest for Crude oil futures was liquidated, which means that a massive pullback was not associated with the new business coming in, but rather an old business getting out.
Despite the local optimism, market fear still dominates, with VIX getting back to 46, a quite notable level. With that, we can expect USOIL to continue sliding down in the near future and reach the area below $57, at least temporarily. The fair price according to expected supply and demand had shifted to $60 (previously $75), as published in the short-term energy outlook from eia.gov
