• 3 minutes 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 6 minutes "Leaked" request by some Democrats that they were asking Nancy to coordinate censure instead of impeachment.
  • 11 minutes Trump's China Strategy: Death By a Thousand Paper Cuts
  • 14 minutes Democrats through impeachment process helped Trump go out of China deal conundrum. Now Trump can safely postpone deal till after November 2020 elections
  • 1 hour Shale Oil Fiasco
  • 3 hours Everything you think you know about economics is WRONG!
  • 4 hours USA v China. Which is 'best'?
  • 16 hours Wallstreet's "acid test" for Democrat Presidential candidate to receive their financial support . . . Support "Carried Interest"
  • 2 hours Global Debt Worries. How Will This End?
  • 12 hours My interview on PDVSA Petrocaribe and corruption
  • 2 hours Quotes from the Widowmaker
  • 1 day Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 34 mins Judiciary impeachment: Congressman says Sean Misko, Abigail Grace and unnamed 3rd (Ciaramella) need to testify.
  • 1 hour Tesla Launches Faster Third Generation Supercharger
  • 23 hours Petroleum Industry Domain Names

Structuring A Trade For The Top Of The Channel

Oil

For any trader, a perfect and clear chart pattern is a wonderful thing to behold. Even those like me who understand that technical and chart analysis has its limitations and will always be overpowered by shifts in fundamental factors finds it difficult to resist the obvious trade in such circumstances. The chart for WTI futures right now shows just such a pattern. In fact, the setup is so perfect that even that obvious trade can be structured in such a way as to guard against the possibility of being wrong.

(Click to enlarge)

I am sure that even if I hadn’t added the trend lines to the above chart, most of you would immediately spot the downward sloping channel in QM, the E-Mini WTI futures contract. Since the end of April oil has exhibited volatility, but in a pattern of lower highs and lower lows that is text book perfect.

The obvious trade now that we are right at the top of that channel is to sell. Even if we don’t continue the pattern and drop to the lower trend line, a retracement back to the next support level at around $45.50 would offer a very nice profit. The problem is that, as is usually the case, there are very good reasons for WTI being at the top of the range.

The two main bullish influences are global growth and OPEC. The strong rally in stocks around the world over the last few months has opened up the possibility of increased oil demand, which would take care of the glut of oil that has kept prices relatively depressed.…




Oilprice - The No. 1 Source for Oil & Energy News