Crude has created a picture perfect bear flag as seen in the weekly chart. Crude’s failed breakout and reversal during the week of May 7th saw futures make a new high for the year of $87.15 before reversing to close down to $75.11. A 13.8% correction ($12) drop in one week. Following this reversal, oil continued its slide making a low of $64.24 retracing more than 38.2% of its move from $33.20 to $87.15. Crude has pushed off the lows set May 20th and has tried to rally for the past 3 weeks, testing resistance and the top of the bear flag $76-$78.51. On the daily chart, crude is trying to break outside of a bearish pennant, this is seen as a false break out as long as prices fail to close above $76.00. An opportunity for bears to sell at these levels, risking a close above the highs, and looking to target the 50% retracement level of $60.00. Bulls should look for a close above $76.00 then $78.51 before attempting to position on the long side.
RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT.
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2 comments:
Nice charts, USO shorts might be worth a shot here.
Really interesting charts..
Thanks!
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